Listen: Our first tokenised bond, featured on RSG

Or read the translated interview transcript in English below:

 Good morning to you all. Thank you. Thank you for being with us so early. Can you just briefly explain the purpose of the MOS initiative to us on the outset?

Well, there’s a lot of global research proving that it’s critically important, especially at the early stages of your school career, that children attend school in their mother tongue. That’s indeed what the MOS Initiative is about. It’s about mother tongue education schools; that’s the focus. In this case, it concerns Afrikaans. Later we may possibly reach out to other language groups, but the MOS Initiative is currently about establishing Afrikaans schools in South Africa and ensuring that children, especially in foundational education including pre-schools, primary schools, and high schools, receive quality education in Afrikaans.

Why did you decide to get involved as a board member of this initiative?

Well, I know everyone who is involved with it, for instance, Dr Theuns Eloff. He’s our chairman, for example, and Roelof van der Westhuizen is our Chief Executive Officer. We also have a specific platform where this particular bond will be issued. I and everyone involved are committed to it, but personally, the reason why I am getting involved is because I care deeply about Afrikaans and Afrikaans education. To be honest, I have two little ones, and within two years, they’ll be in high school. I would like them to attend a good quality high school, and I reckon if I get involved now, I can help with that.

 Then you want to raise R100 million. That’s not small change. What do you want to use it for?

Yes, this is the first round, and we want to raise R100 million, which is quite something. It’s interesting to see how specifically we’re going to do this, maybe we can talk about that as well. This R100 million will be used to build schools. It costs a lot of money to build schools. Building schools is not a cheap endeavour, so we are looking at different alternatives, either building schools from scratch in different places. It’s quite direct, a lot of market research needs to be done. You don’t just build a school anywhere. You have to make sure there’s a feeder area around the school. Or we can buy schools. But this money will be used to build or buy Afrikaans schools.

Could you explain to us what this smart corporate bond is? How does it work?

Yes, it’s interesting. Remember first, we are going to borrow money from investors, and before you’re allowed to borrow, you must first register a Prospectus. We’ve done all that. A Prospectus has been registered. Usually, how it works is, if I want to borrow money in the financial markets, I register Prospectuses and then I sell bonds or notes. Once these bonds are issued, then they go to the stock exchange, for example. Then what people call dematerialization takes place. You don’t actually get the physical bond, but the bond does exist. The records are kept at, for example, the Johannesburg Stock Exchange.

What we’re doing in this case, we’re using a brand-new platform, the first in Africa. It’s the first time that a corporate bond in Africa is being issued through this method. This bond will be issued on a specific platform, and I’ve spoken a few times already about this so-called blockchain platform. This is a blockchain platform that’s recognised, as are the people involved – Andries Brink, for example, and other individuals. My company has already issued a range of financial instruments on this blockchain platform.

So what you’ll do, if you’re interested in this, you’ll buy a piece of digital information, a note or a bond on this specific platform. You put your money on the platform, and then you have a smart bond that’s issued on this platform called Mesh.trade, where you can buy and sell this particular bond.

So it is indeed a first in Africa. It’s brand new technology – different from, say, the securities exchange. When you buy a share on the securities exchange, the purchase and sale transaction does not take place immediately. There’s always a few days’ delay before the transaction is finalised. In this case, the transaction happens immediately. So if you buy it, it’s yours immediately. If you sell it, you get your money back immediately.

If you’ve just tuned in, you’re not late; it’s that familiar voice, but with a different hat on this morning. He’s the director of the MOS initiative, a company that focuses on mother tongue teaching and wants to raise R100 million from investors.

 So you’ve talked about how people can invest, but now the big question is, is it a safe investment, Dawie?

There is no such thing as a risk-free investment. All investments carry risk. But I wouldn’t get involved with something if I thought there was too much risk. I wouldn’t get involved with something if I didn’t think the people involved knew what they were doing. So personally, I am completely satisfied that all the people involved, all the technology behind it, all the businesses, all the finances, everything is properly in place. That’s why I’m completely satisfied this investment is a good investment. I think it’s because it’s tied to the prime interest rate. The return rate you get is Prime+2%. So as the prime interest rate rises, if the Reserve Bank increases interest rates, for example, then your return on this bond goes up accordingly, and if it falls, it falls accordingly as well. You get your interest paid out to you every quarter just as you want. But the return rate at this stage, the return you get is Prime+2%.

Can anyone buy these bonds, either individuals or a business enterprise, anyone?

 Yes, anyone can invest. There are certain legal requirements that need to be met. You have to open an account on Mesh, just like with anything else. Let me give you some information about that. You open an account, you do your so-called FICA, and you do all the things you have to do according to the law. Then anyone can go buy these bonds. You can already indicate whether you want to buy now; there’s a place on the website where you can say I’m interested in buying, and typically you can buy from R10 million to R20 million, or you can buy for as little as R5 000. If you buy a R1 million bond, for example, you can sell R50 000 of it later if you want to. You don’t have to sell the whole R1 million again, it can be traded in pieces of as little as R5 000. We would really like individuals to get involved, but individuals, companies, anyone is welcome to go register on this website and then you can buy as much as you want. And if I listen to the interest from the market so far, I think it’s going to be a very successful issuance.

Are there any other costs associated with this investment purchase?

When you buy it, two things happen. You can participate in the primary issuance. That’s the first time the bonds are issued or launched on this specific platform. Then there are no costs involved, so you transfer your money, you open your account, pay your money, then you get your bond. It’s yours. Then you get your interest on a regular basis, and that’s it. But if you were to sell at some point, then there are costs associated with it, like the trading costs on the secondary market. So there’s a small trading cost of 0.2%, which is a relatively small price. It can be compared to the costs you also pay when you buy and sell shares on the JSE. But the primary issuance, if you’re going to buy it for the very first time, there are no costs involved. The costs are paid by the issuer, which in this case is the MOS Initiative.

Wrapping up.

The process has already kicked off… People can already place an order to buy these bonds. The bonds will actually be issued… the process is already underway. As I said, there’s a tremendous amount of interest, and I am very excited about that.

For the first time, you’re hearing about it. Where can people now get information about it, Dawie?

The process is quite interesting, and maybe I’ll just say something about it. You’ll do one of two things. The easiest thing to do, you go to MOS, and select the MOS Initiative, and it’ll take you to the necessary pages, for example. Or another thing you can do, you can go to www.Mesh.trade, and that will take you directly to the platform. There’s a pop-up that you can click on which it takes you through the whole process. So either MOS Initiative or Mesh.trade.

Now that you’ve opened your account there, there are legal requirements, and you have to prove certain things. Like, for example, your address, you need proof of identity, proof of everything. It’s a very, very easy process to open your account there, on the Mesh platform, to place your money in – and that’s something that excites me. What happens, your money is then converted into mZAR, but it means you get a bond, and against that, you prove it to SARS. It sounds terribly complicated, but it’s very simple. That’s how it works these days.

You get an mZAR, and your mZAR then buys you the specific bonds, and if you want to, you can reverse it and can get your money back. It’s new technology. It’s the first time in Africa that such a so-called smart corporate bond is being issued, and I am very excited to be closely involved.

Does the token look like a Lazy Ape?

 No, it’s not a Lazy Ape. It’s different to an NFT, which you’re referring to, which is also a bond, but remember, these bonds are unique. They are all exactly the same, you can buy one bond from the lineup, unlike an NFT. It’s more like Bitcoin, but I don’t want to compare it to Bitcoin because it’s not that.

For more information, visit Die MOS Bond Asset Detail page on Mesh. Remember the Bond is only open for subscriptions until 26 April 2024.