NAMIBIA – Namibian investment company, Trustco, has said that it has entered into a derivative agreement that could result in a US$141.28 million (N$2bn) capital raise and improved liquidity of its shares.

Trustco said that the warrant agreement with Evo Fund could see the company issue new shares. Warrants give the holder the right, but not the obligation, to buy shares at a certain price within a specific timeframe.

The agreement will also increase the trading volume and liquidity of Trustco shares, allowing it to “meet various index liquidity requirements” and could “aid in the price discovery of the company’s shares” reports Business Day.

The company said that the funds raised would be used to “unlock further opportunities and optimise current operations in the resource segment”, fund acquisitions, cut debt and “ensure the banking and finance segment is well capitalised.”

Trustco had in June this year raised eyebrows with its financial report after it reported that profit after tax more than doubled in the year to end-March. 

“The group’s diversified business model, both in revenue streams, geographical regions and asset spread again proved its worth,” Trustco said at the time.

However, the company’s statements showed that revenue was boosted by a US$69.54 million (N$984.4m) “transfer of inventory to investment property” gain.

This stemmed from a decision not to develop properties previously bought for that purpose.

The company, which operates three segments: insurance and investments, resources, and banking and finance, reported an 85percent increase in revenue to US$104.54 million (N$1.48billion) for the year to end-March, boosted by the contribution from its insurance and investment business.

The insurance and investment business grew its segmental revenue by 241percent to US$91.83 million (N$1.3bn) during the year with the segment reporting a 99 percent increase in profit after tax to US$20.63 million (N$292m). 

The group reported a 165percent increase in profit after tax to US$51.21 million (N$725m).

The company is also working with Oryx Properties in developing a shopping centre at the Elisenheim village estate, Namibia which is expected to create over 200 permanent jobs.

According to Oryx’s chief executive officer, Ben Jooste, the centre which will be constructed in three phases, with the first phase, valued at an estimated US$7.77 million (N$110 million) is expected to be completed by February 2020.