The major shareholders are Standard Bank with a 49 percent shareholding, JP Morgan with a 29 percent shareholding and Peregrine with a 10.1 percent shareholding. IFC is currently owner of 8.6 percent of shares. The remainder is held by employees. Standard Bank and JP Morgan can be considered the key project sponsors. The CEO of the company is Simon Stockley.

The total project cost is estimated at up to $2.5 million. This is for the proposed buyout of shares, and would constitute an additional investment by IFC in the equity of the company.

2.51 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	2.51

* These investment figures are indicative

SAHL is headquartered in Durban, South Africa. It operates in all major cities throughout the country. SAHL has developed a novel distribution system. As such, it does not have a traditional branch network. It employs about 60 sales agents who travel around in marked cars displaying the SAHL logo and take mortgage applications at clients homes and places of business. In addition, a certain portion of originations are sourced via the call center and over the internet.

This is a category “C” project according to IFC’s environment and social review procedure. It is expected to have minimal or no environmental impact. No further environmental review or action is required.

Location of environmental documents in locally affected community

There is a significant role for IFC to play going forward based on the following considerations: Demonstration effect on other countries of the region, particularly those with a high likelihood of developing housing finance systems in the near future. IFC’s continuing support for the best example of housing finance development in the region’s most closely watched financial market will set a standard and send a signal for up to seven other countries in the Sub-Saharan Region. The signal will be that IFC has the expertise, institutional binding power and vision to lead markets in terms of housing finance development. The standard and the signal will make it easier for IFC to make progress in our high priority countries. If we fail to take this opportunity, a contrary signal will be sent, with deleterious effects in other high priority countries. Making housing finance more affordable: The impact has been partially realized by opening a new distribution channel outside the dominant banking firms. In addition, SAHL has succeeded in raising awareness of the significant over-pricing by the banks. But the job is only partially complete. Market share of originations is only about three percent. On a book basis, market share is only slightly over one percent. There is building political pressure on the big banks to serve their communities by offering mortgage loans to qualifying lower income households. So, in addition to the upside in making further inroads in market share, SAHL is the viable and proven conduit to handle lower income mortgage loans and increase funding to this segment. IFC’s increased investment in SAHL will bolster this line of business. Developing a new asset class of MBS: This has only partially been accomplished. Two completed deals, although quite successful, are nonetheless limited, unless mortgage product can be sourced from other originators. IFC’s unique honest broker reputation gives us the best opportunity to achieve this. Having a larger shareholding adds to our credibility in this endeavor. It has become increasingly obvious that demand for MBS is growing, even beyond the normal long-term institutional investor base, as two banks have recently established commercial paper conduits that will invest in SAHL MBS. Future market development: Ability to use SAHL as a possible vehicle for the development of a secondary mortgage market for residential loans. As a result, IFC can leverage its investment in SAHL to have a greater impact in the development of the South African financial market. This places an additional dimension to the value of SAHL from IFC’s perspective. Peregrine is one of the founding shareholders of SAHL. Peregrine is an investment company. Its principals have no expertise or special interest in the mortgage business. Their initial shareholding could be construed as a pure venture capital investment. They have not participated in rights issues, and are now interested in selling. Of the major shareholders, IFC, by virtue of its relatively small shareholding, honest broker reputation and recognized expertise in housing finance, is uniquely positioned to buy the shares and instill a clearer sense of mission to the Company. The two largest shareholders, Standard Bank and JP Morgan have very good working relationships with IFC. Together, we would form a cohesive and effective management team. This mission is every bit as important as infusing new capital.