The fintech company has swung back to a loss, due mainly to an investment drive in its principal asset, EasyEquities. Can it keep the faith of a divided, yet devoted, investor base?
Purple Group, which owns stockbroking success story EasyEquities , has swung back into the red after ploughing money over the first half to end-February into growth initiatives. It’s also looking to raise R150m from the market, which has distinctly cooled towards the share. The FM spoke to CEO Charles Savage. We’re still growing at a very healthy rate in the context of the economy.
In a global context, we’re taking relatively small bets, but relative to our income statement they’re quite big bets, so they have a big impact on our income statement. One million customers is not the goal — it’s multiples of that. To get to our goals we can’t rest on our laurels and deliver what some shareholders want — that is, profits and dividends at the cost of future growth.
For example, we’ve now got Distell’s admin and assets which for 40 years were handled by Momentum. They’ve come over to us because of EasyEquities — they want their staff to be able to see transparency. They can see the money they have via their pension funds but they can invest in a bunch of other stuff too. Ford is another one, and we now have 8,000 clients at a cost of acquisition of nought.
If you’re at the lowest cost to serve and you have this entrenched distribution base — that is, 60% of South Africans in our sights — you’ve got an extraordinarily low cost to launch a product. That means we don’t have to invest too heavily. Our spend of R30m in the past six months was to deliver new jurisdictions in the Philippines and Southeast Asia, launch EasyCredit and EasyProtect, and implement initiatives that are driving down our cost base.
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