Water Financial Offers Flexibility With Preference Shares

For investors and issuers alike, preference shares provide increased flexibility and accessibility, making them a smart – and attractive – class of tokenised equities. A good example is Water Financial’s ‘A’ Preference Shares, issued as Smart Assets on Mesh. These shares are available for a limited 1-week subscription period, from 23 to 30 August 2024, exclusively via Mesh.

As a registered credit provider, Water Financial was founded in 2010 to fund projects that are changing the world for the better. Since 2020 the company has focused on the financial plight of retirees. 

As a National Credit Regulator (NCR) regulated lender, Water Financial provides loans (paid monthly), to retired people over the age of 70 with an unbonded home, to alleviate their cash flow shortfalls. 

The loan agreements are entered into conservatively, using low loan-to-value ratios over a reviewable five-year period. These are made against primary residential properties and are repaid on moving, sale of the asset, or by the estate on death of the last surviving spouse. 

The ripple effects of retirement

“For many retirees, fixed incomes simply don’t keep up with the increasing cost of living, and many are compelled to sell their homes and move in with their family,” says Water Financial founder Chris Loker. “Many elderly people have their wealth tied up in their homes, which limits their ability to access their capital when an emergency occurs.”

It’s a painful irony: many financially distressed retirees are also major asset owners, specifically through their paid-off residential properties. “In South Africa an estimated R966 billion worth of residential property is owned by retirees, with as many as 50% of them in some stage of financial distress, according to a 10X survey,” Loker adds. 

The problem is compounded by rising life expectancy. “Hundred-year life spans are no longer unusual,” says Loker. “However, almost every institution – government, insurance, finance, medicine – remains oriented around prior longevity expectations. This leaves a significant segment of the market financially vulnerable – specifically over 70-year-old retirees.”

Water Financial’s story is a confluence of three trends, says Loker: a neglected market; a social and financial problem created by increased longevity; and incumbents acting as gatekeepers to innovation. “This gives us the opportunity to disintermediate the incumbents and offer enhanced returns to investors directly, through our Preference Share issuance on digital capital markets platform Mesh.”

Water Financial ‘A’ Preference Shares

Over and above the social impact, Water Financial’s ‘A’ Preference Shares offer a low-risk investment with attractive returns. Each share has a subscription value of R1,000, with a minimum subscription amount of 10 ‘A’ Preference Shares, which equates to a total minimum investment amount R10,000. 

Investors will receive dividends on a monthly basis, with the dividend rate calculated at 87% of the Prime Rate. Note that the gross dividend may be subject to Dividend Withholding Tax.

These shares are available for a limited 1-week subscription period, from 23 to 30 August 2024, exclusively via Mesh. Click here to join the waiting list. 

The targeted issuance is R30 million, with a maximum oversubscription of R60 million.

Click through to read a wide range of Frequently Asked Questions about Water Financial’s Preference Shares, and click here to join the waiting list.