ReclaimHub — Capital Requirements & Funding Structure
The R2.4 billion raise, the equity and term-debt structure, the ~R2.85 billion secured pawn-warehouse facility, the covenant package and the use of proceeds underpinning ReclaimHub.
Section 16 · Business Plan
Capital Requirements & Funding Structure
The R2.4 billion raise, the equity and term-debt structure, the ~R2.85 billion secured pawn-warehouse facility, the covenant package and the use of proceeds underpinning ReclaimHub.
The R2.4bn raise funds the platform — inventory, store rollout,
technology, refurbishment capacity, and a R500m lending seed. As
established in Section 12, the loan book’s growth to R3.8bn is funded
separately by a secured warehouse facility. This section sets out both
layers of the capital stack.
16.1 Use of the R2.4bn raise
| Allocation | Amount (R m) | Purpose |
|---|---|---|
| Inventory acquisition | 850 | Build retail and refurbished-goods stock across the network |
| Store rollout | 620 | Fit-out of ~350 corporate and flagship stores |
| Lending capital pool | 500 | Seed equity for the pawn book (25% haircut layer) |
| Technology platform | 220 | Valuation engine, POS/lending system, marketplace |
| Refurbishment hubs | 150 | Regional diagnostics, repair and grading centres |
| Working capital | 60 | Launch-phase operating buffer |
16.2 The two-layer capital stack
Investors should see the funding as two layers. Layer one — the
R2.4bn raise — is split in this plan into R1.4bn of equity and R1.0bn of
corporate term debt. Layer two is the pawn warehouse facility, a
revolving secured line scaling with the book to about R2.85bn by Year 5.
The two layers together — roughly R5.25bn — are the true funding
requirement.
| Facility | Type | Y5 balance (R m) | Indicative terms |
|---|---|---|---|
| Equity | Ordinary + DFI/PE/family office | 1,400 (invested) | 5-year hold; exit via listing/sale |
| Corporate term debt | Senior amortising | 280 (from 1,000) | ~11.5%, 6-yr, 1-yr grace |
| Pawn warehouse facility | Revolving, secured on book | 2,850 | ~12.5%, 75% advance rate |
(1) Arrange the warehouse facility in principle at or before
financial close, sized to 75–80% of eligible book; (2) sequence equity
ahead of term-debt drawdown to protect early-year coverage; (3) fund a
debt-service reserve account (DSRA) equal to 6–12 months of term-debt
service from the raise; (4) keep the credit book in a ring-fenced entity
so the warehouse lender takes clean first-ranking security. These four
measures convert the plan’s funding and coverage findings into a
bankable structure.
16.3 Proposed lender covenant package
To make the corporate term debt and the warehouse facility bankable,
the plan proposes a covenant package that gives lenders early warning
and control without strangling the growth plan. Covenants are set with
headroom to the base case but bite well before the downside case turns
critical.
| Covenant | Proposed level | Rationale |
|---|---|---|
| Minimum DSCR (from Y4) | ≥ 1.20x | Coverage tested once amortisation is fully phased in |
| Warehouse advance rate cap | ≤ 80% of eligible book | Preserves equity cushion against collateral shortfall |
| Loan-book impairment ratio | ≤ 8% of average book | Early signal of credit or valuation deterioration |
| Net debt / EBITDA (from Y3) | ≤ 3.5x | Caps total leverage as the book scales |
| Minimum liquidity | ≥ R150m + DSRA | Ensures ramp-year resilience |
| Store-rollout gate | Openings ≤ funded capacity | Prevents scaling ahead of funding |
The debt-service reserve account (DSRA) and the store-rollout gate
are the two covenants that respond directly to the independent findings:
the DSRA neutralises the ramp-year coverage shortfall, and the rollout
gate prevents the funding architecture gap from ever materialising by
tying store growth to committed capital.
16.4 Capital deployment timeline
The raise is drawn and deployed against the rollout, not in a single
tranche. Equity is front-loaded (R900m in Year 1, R500m in Year 2) to
carry the loss ramp; term debt follows the same profile; and the
warehouse facility draws progressively as the book grows. This phasing
is what keeps cash positive throughout despite two years of net
losses.
| Line item (R m) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Equity drawn | 900 | 500 | 0 | 0 | 0 |
| Term debt drawn | 600 | 400 | 0 | 0 | 0 |
| Warehouse balance (cumulative) | 90 | 308 | 713 | 1,575 | 2,850 |
| Capex deployed | 205 | 196 | 199 | 217 | 343 |
| Closing cash | 1,123 | 1,532 | 1,127 | 896 | 947 |
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of ReclaimHub Retail Group (Pty) Ltd.