TOKENIZATION | South African Reverse Mortgage Provider, Water Financial, Issues $1.6 Million Capital Raise in Tokenized Assets on the Stellar Blockchain

Water Financial, a South African reverse mortgage provider, has issued a $1.6 million (30 million Rand) capital raise facilitated by Mesh.trade, a tokenised financial assets exchange.

The exchange issued 30,000 ‘A’ preference shares, which will provide a monthly dividend amounting to 87% of the prime lending rate.

Mesh, among the companies that recently obtained South Africa’s inaugural crypto asset service provider (CASP) licenses from the Financial Sector Conduct Authority (FSCA), facilitates the issuing and investing in digital capital markets assets on the Stellar blockchain.

“We designed our platform to offer investors access to previously inaccessible investments, as well as a regulated alternative avenue for entrepreneurs looking to raise capital to fund their growth,” said Mesh.trade Managing Director, Connie Bloem.

In July 2024, Mesh was awarded Category 1 and Category 2 Crypto Asset Service Provider (CASP) licenses by FSCA, making Mesh the first fully licensed issuance platform in Africa to tokenise financial assets.

• A CAT I license is the standard financial service provider license required for a CASP in South Africa to provide advice or exchange services to its customers
• A CAT II license, or discretionary mandate license, enables customers to financial service providers a mandate to use its discretion to structure the customer’s portfolio, for example

The two licenses are intended to protect customers and investors and enable regulators to take enforcement action for compliance failures.

According to Bloem, issuing Water Financial’s tokenized preference shares was a natural extension of the various types of smart assets offered on its platform.

Mesh stated that the Water Financial issue presents an opportunity for investors to incorporate cumulative, redeemable, floating rate preference shares into their portfolios.

Water Financial, a registered credit provider, offers home equity release services, commonly known as reverse mortgages. The company identified the growing societal issue of increasing numbers of retirees over 70 who face financial difficulties while residing in fully paid-off homes.

In 2021, it introduced a product, named Freedom Finance, aimed at helping retired homeowners access the capital tied up in their properties.

Reverse mortgages enable individuals with fully paid-off homes to secure a loan without having to make monthly repayments.

According to Water Financial Founder and Managing Director, Chris Loker, by buying its preference shares, investors would be supporting a model that ensures elderly homeowners maintain ownership of their homes and enjoy flexible terms tailored to their needs.

“The issuance of our Preference Shares on Mesh.trade’s platform gives investors access to higher than inflation returns from an innovative business looking to disintermediate traditional financial institutions that are unable to service this growing market segment,” said Loker.

This capital raise will be the first in a series intended to support the company’s increasing lending requirements and its expanding client base.

Mesh.trade plans to issue additional alternative and private capital assets to investors in the coming months.

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