GB Capital, a subsidiary of GB Corp, has announced that its financial portfolio has exceeded EGP 9.5bn and that it is in the process of establishing a new company for securitization. In an interview with Daily News Egypt, Sherif Tawadros, Senior Vice President of Finance and Corporate Affairs, at GB Capital, spoke about the company’s non-banking financial services through its various subsidiaries.
Tawadros explained that GB Capital’s subsidiaries include GB Lease and Factoring, Drive Finance, GB Auto Rental, Capital for Securitization, Kredit for small and medium-sized projects, as well as stakes in Bedaya Mortgage Finance, MNT Halan, and Kaf Insurance.
He said that the diversity of these subsidiaries gives GB Capital a competitive edge in the market, as it allows it to serve different segments of customers and to benefit from the synergy among its activities. He also revealed that GB Capital has received preliminary approval and deposited EGP 10m to establish GB Capital for Securitization, a new company that will issue securitization bonds for the group’s companies.
Tawadros also shared the group’s plans to issue five new securitization bonds worth EGP 8.5bn by the end of the year. He said that the group has access to various sources of funding, including credit facilities of about EGP 7bn and bond issuance. He added that the group is cautious in granting loans to its clients, especially in light of the economic challenges such as high-interest rates and inflation. He predicted that interest rates will increase by 3% in 2024.
The interview also discussed the performance of the group’s subsidiaries, such as GB Leas and Factoring, Drive Finance, and Kredit, which provide different types of financing to customers. Tawadros expressed his optimism about the growth potential of these sectors, especially with the increasing demand for consumer finance and vehicle financing.
Mohamed Aburiah, Vice President of Treasury, Securitization, and Islamic Sukuk, GB Capital, said that the group’s companies allocate a part of their profits to support their capital base, which strengthens their financial position. He said that the group’s companies use securitization as a tool to refinance their future financial rights, which helps them reduce their financial leverage, access more credit facilities, and increase their volume of activities.
He said that most of the proceeds from the securitization bonds issued by the group’s companies are used to repay the facilities that were granted to the securitized portfolio. The recycled facilities are then used to provide new financing to the company’s clients.
Aburiah also mentioned that Tasaheel, through its subsidiary Capital for Securitization, issued securitization bonds worth more than EGP 3bn in four tranches earlier this month. The first tranche was EGP 952m with a maturity of 6 months, the second tranche was EGP 506m with a maturity of 9 months, the third tranche was EGP 541m with a maturity of 13 months, and the fourth tranche was EGP 1.036bn with a maturity of 34 months.
He said that banks acquired about 60% of the total issuance, while investment funds acquired the remaining 40%, with investment slices ranging from EGP 50m to 150m. He said that securitization bonds have lower costs than conventional financing for each tranche, which reduces the weighted average cost of borrowing for the companies.
In a related context, he mentioned that Capital for Securitization manages five securitization issuances expected to be completed before the end of the current year, benefiting the financial group’s companies. Furthermore, the company plans to extend securitization services to external companies next year, expanding its activity beyond the group’s financial subsidiaries.