Koshiek Karan Profile picture
Jun 3, 2021 21 tweets 6 min read Read on X
Thinking of investing in YWBN Mutual Bank? [Thread]
WTF is a mutual bank?

You're probably thinking 'oh no VBS!'. Not all mutual banks are dysfunctional.

Mutual banks are institutions owned by depositors and are regulated. They also have lower capital requirements with the SARB.

They can accept deposits can issue loans.
The first red flag on YWBN is the 'membership fee' for 100 bucks. Having done a fair share of capital raising it's the first time I've seen a non-refundable membership fee to participate in an issuance. It's not common.
Is it easy to get involved?

Sure, if you have R1k lying around. After paying your 100 bucks club entrance fee - the minimum subscription is 100 shares at 10 bucks each (1k, quick maf)

Interesting to see a co-op bank set the minimum to R1k.
Fun fact: YWBN owns 26% in Namlog (logistics, distribution & warehousing company). Ninathi Holdings owns a couple of car washes. Gives a bit of colour to the interesting bank management team.

Is this a car-tel?

(That was good. Honestly, I'd follow myself on this app if I could)
The YWBN Mutual Bank investor materials say the right things - unemployment, diversity, financial exclusion, serving the underbanked.

Except it excludes all the hard detail you usually find in a prospectus - the stuff helping you decide if it's a great investment.
How about the valuation?

R5bn

Take a second and let that sink in. 19% for 95m shares (each share is 10 bucks) implies a R5bn valuation.

If you think a R5bn valuation is absurd... wait until you see the numbers underpinning this.
They're currently making R2m a year attributing it to an increase in membership

Ideally, you would apply a price/book multiple to benchmark a FI. BV assets aren't provided.

In this instance, if revenues grow 100x - you're still looking at a 20x top line valuation. Steeeeeeep!
Why would you put a bloated valuation in front of the public?

Simple. You become instantly rich since the value of equity stake skyrockets. How much is the founder's equity? 44%

This implies a founder valuation of R2.2bn on day 1
Apart from the sweat equity % being very steep at an eye-watering valuation there's zero mention of founder's hard capital commitment

A founder's co-investment is a key factor to watch in a capital raise. Are you putting your own money into this?
So you invest into YWBN Mutual Bank, when can you realistically expect to start seeing returns?

6 years

No seriously

Don't expect to see any gains any time soon. Whenever I see the words "sustained investment", I'm tempted to take my investment capital and throw it into Betway
So if you need cash quickly, can you sell?

lol no

This lock-in is longer than most of your relationships. There's literally no liquidity in the instruments you're buying.

Oh & after 6 years - you need board approval and need to apply to sell YOUR shares
But you will get a dividend right?

Uhm....

Look if there's "money left" - so no, don't pin your hopes on this being a juicy yielding investment ESPECIALLY across the first 6 years
Let's be absolutely blunt here - what you're being sold is a share in a mutual bank, what you're actually getting is an instrument resembling long dated sub-ordinated paper (ranking below debt) with uncertain yield, lock-ins & low liquidity.

You're very cheap financing. End of.
Where the fuck is all this money going?

A stake in Arsenal?

This money is going to buying assets, developing IP, and produce development. You're effectively a pre-seed capital funder. There are no products immediately scalable here.

This needs work. Lots & lots of work.
If there's only tweet in this thread to stick with you - its this one. These forecasts are insane.

In a bank, loans are assets & deposits are liabilities. Pay VERY careful to the growth in the asset base relative to the liabilities. Massive mismatch here.
Remember growth in assets = growth in loan book

This is a high risk lending segment. You're growing deposits at a MUCH slower growth rate vs. extending your lending book. You lock in your equity participants. for the capital buffer.

Aggressive lending + high risk = .....
The easiest way to counter default risk is through higher yields on borrowings. If you're an investor I would strongly encourage you to find out what the typical borrowings yields are envisaged to be on YWBN mutual bank debt.

This will tell you everything about sustainability
The leadership team does have experienced folks - no doubt. But then there's this homie who is in.... the car business!

What is it about this bank and its link to vehicle businesses? On the upside, Raymond went to hotel school & did a couple of courses.
Here are the advisors
Overall - looking at the eye watering valuation, massive owner sweat equity stake, stage of readiness, long lock-up period, insane forecasts, opaque detail on envisaged yields & overall risk you have to be one brave soul investing into this business.

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More from @iamkoshiek

Apr 23
South African household income stats 🇿🇦📊

median monthly income = R7, 891
average monthly income = R17,030

- White: R56,365
- Indian: R34,786
- Coloured: R21,735
- Black African: R11,969

Source: Stats SA, IES 2022/ 2023
monthly household income by education level 🇿🇦

tertiary education: R48,188
secondary education: R12,480
no schooling: R7,015

for households headed by those with tertiary education
- income is 7x higher vs no schooling
- income is 4x higher vs secondary education
South Africa is a majority low income country with widespread unemployment & high levels of inequality

if you could access the debt profiles, credit scores & payslips of people on twitter -- you would likely see more honest takes on money

the truth is in the data
Read 8 tweets
Apr 20
do you ever feel the news you consume is overwhelmingly negative?! 💔💔

you’re completely right — it really is

I ran a deep, content sentiment analysis for every article, social media post & headline published across media houses

in short: SA media LOVES bad news 📰 Image
the biggest culprits of publishing paralysing fear & doomsday prophecies:

Daily Maverick, Daily Investor, BusinessTech & eNCA

but there’s a strong chance you already knew that based on their relentless, negative headlines
quick note on how this sentiment tracker works

each content piece (article body, headlines, summaries, social media post) is classified using natural language processing

then you aggregate to compute an overall sentiment score (e.g. -0.40 means 40% more negative than positive)
Read 13 tweets
Apr 17
South African stocks are crushing record highs & gold is at all time highs 🇿🇦🔥

SA is now ranked among the best performing markets globally this year 🏆

the rand (relative to the US dollar) remains unchanged this year 📈📈 Image
wait — why is there such limited local media coverage for positive news?!

SA media LOVES reporting currency weakness, stock market crashes & negative news on South Africa

fear, outrage & clickbait drives clicks & engagement — opportunity doesn’t sell
my favourite strategy of financial media is using two completely independent events to force a useless correlation

“SA politician seen buying 3 chocolate Easter bunnies — rand collapses as investors flee!!”

this works GREAT in countries with low levels of financial literacy
Read 9 tweets
Mar 26
MTN just ended their eight year front of shirt sponsorship with the Springboks 🏉🏉

here's an inside look at the big business behind the most iconic jersey in world rugby [thread] Image
what isn't being widely reported (yet) is how the ongoing Springboks private equity ownership discussion has impacted anchor sponsor relationships

the recent failed takeover bid from Ackerley Sports Group (ASG) has sparked friction & uncertainty at executive level Image
SARU stood to pocket a 15% success fee for brokering a successful equity deal

except this was a terrible deal for South African rugby

I covered the deal mechanics in extensive detail here (worth a read)
Read 14 tweets
Mar 24
⚠️"South Africa is the most difficult place in the world to do business!!" ‼️

business media & "economists" thrive on terrifying headlines, social media outrage & ramping up fear

here's a purely fact-based analysis on this chart worth reading [thread] Image
having spent MANY years in the investment banking engine room, it's very common to cherry-pick economic data to support any narrative

(known as confirmation bias)

many of the viral finance charts floating around are "math-washed"

they're designed to spark a strong reaction
"SA is the hardest place in the world to do business.... against 49 other countries"

if the world had 49 countries, this would be terrifying!!

but the IMF said so, it has to be accurate, right? this is a classic "appeal to authority"

... & no, the source isn't even the IMF Image
Read 18 tweets
Mar 13
I reviewed the full 273 page South African budget report so you don't have to grind through it

here's how the numbers impact us [thread]

#AdviceForSuccess #BudgetSpeech2025
budget 101: when expenses are more than income = trouble

that's exactly where South Africa is (& expects to be going forward)... running a budget deficit

here's an excellent chart showing the deficit projected to widen over time Image
when you're running a budget deficit, there's a couple of ways to close the gap

1. cut costs & improve efficiency*
2. increase revenues
3. plug the hole with debt

*corruption, wasteful expenditure, price inflated tenders, a bloated cabinet, bailouts & high salaries fit here
Read 18 tweets

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