Cape Town - Ecsponent Limited [JSE:ECS] has established a reputation over recent years for its forward-thinking approach to organic and acquisitive growth strategy in South Africa and Africa. With their strong future-based investment philosophy, the group has entrenched itself within the highly competitive financial services sector in Southern Africa.
Why Biotech can future-proof investment returns
One of Ecsponent Limited’s investment strategies is to acquire interests and develop technology businesses with high intellectual property and high barriers to entry.
Salveo Swiss Biotechnology and Cryo-Save, both global cord blood and stem cell banking organisations, form part of this strategy. Regenerative medicine is a medical treatment that uses stem cells (among others) to regenerate cells, tissues, or organs and recover body functions lost by accidents or disease.
Ecsponent Limited CEO, Euné Engelbrecht, explains that investor returns usually come to smart investors able to identify the sector that everyone else is ignoring and that is about to become really important.
“Biotech investing has the possibility of significant payoffs, although most biotech companies have long development timelines. Because of this, you’re looking at a 10 to 15 year investment, not suited to the investor that’s looking for a quick return.”
“At Ecsponent we are always looking for attractive investment opportunities. Health-related businesses are considered 'defensive', meaning they can better withstand economic shocks, plus, we have hundreds of proof points that biotech is really a critical growth area for the next 100 years of human civilisation.”
Unlimited investment potential
Biotech and healthcare funds were riding high among the top performers of 2015 as promising new solutions and robust consumer demand lure investors to the sector. Due to worldwide demographic and wealth trends, the healthcare industry is also seen as a dependable buy-and-hold investment.
According to a recent MoneyTree Report from PricewaterhouseCoopers (PwC), the biotechnology industry landed a massive $2.3 billion worth of venture capital investments during the second quarter of 2015 - a 32% increase over the prior quarter. This marks the biggest quarterly investment in biotech in the United States since the MoneyTree report first came out in 1995.
Advances in stem cell therapy globally have been remarkable, and Africa remains the only continent that does not have a public stem cell bank.
This means there is a severe global shortage of genetically compatible samples representative of South African demographics. Going forward this creates a massive need for biotech companies across the continent and any investment in this sector will undoubtedly continue to prove a sound and lucrative one.
Ecsponent Limited’s strategy for investor success
Ecsponent Limited continues to reflect solid growth in its underlying operations. In the latest notice to shareholders forecasts for the year ended 31 December 2015, as compared with the published results for the year ended 31 December 2014 reflected:
• Earnings per share (EPS) is expected to increase by a minimum of 100% relative to the previously reported comparative period.
• Headline earnings per share (HEPS) is expected to increase by a minimum of 40% relative to the previously reported comparative period.
Engelbrecht touches on Ecsponent Limited’s continuing growth strategies:
“The company’s financial services arm is continuing to focus on growing its financial services footprint into targeted countries in Africa, having established operations in Botswana and Swaziland during the December 2014 financial year.
“The Group also recently secured a micro-finance deposit-taking license from the Bank of Zambia and is establishing operational infrastructure in the country.
“Going forward the group will continue to focus on financing SMMEs (small, medium and micro-sized enterprises) and developing its position in niche financial services markets,” he says. The group has disposed of its retail credit operations in South Africa over the past year as a result of the volatility in the sector.
“In future Ecsponent will continue to seek out value-enhancing acquisitions that will allow it to benefit from scale, as well as pursuing organic growth,” concludes Engelbrecht.
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