R180m write-down for taxi default-hit Mi-Plan fund

Investors in the Mi-Plan Enhanced Income Fund who had hoped for some good news after it announced its exposure to Bridge Taxi Finance a year ago, have instead received the opposite.

Vunani Fund Managers, which manages the fund on behalf of Mi-Plan, told investors in January that “at the end of December, leadership of the management company along with the trustees of the collective investment scheme [BCI / IP Management Company] made a decision to fully write down a subordinated note”.

Listen/read: Those going into an income fund might think their capital safe …

It says “Vunani Fund Managers categorically expressed its disagreement with this stance”.

Mi-Plan MD Anton Turpin says: “While no trading is possible in the MiPlan IP Enhanced Income Retention Fund units, the carrying value is important for other unit trust funds and fund of funds to continue to ensure their assets are fairly valued as required by the Regulator.”

The note (i.e. debt) in question was part of the Redink structure (RED707) which offered exposure to Bridge. In November, this comprised nearly 30% of the value of the fund (28.1%), which equates to R179.29 million.

Exposure ‘side-pocketed’

This exposure to Bridge Taxi Finance, via the Redink and Martius structures which are listed on the JSE, was ‘side-pocketed’ into a separate ringfenced fund from the main Mi-Plan Enhanced Income Fund. No withdrawals would be permitted from the side-pocket Retention Fund.

This debt was originally valued at R950 million, but the values of the four instruments (two Martius and two Redink) were written down by between 20% and 40%.

A write-down of 40% was originally made for RED707. This is now at 100%, which has seen the net asset value of the fund drop from R650 million to R471 million. While RED707 has been written down to zero, there remains the prospect that value may yet be recovered (at this point, however, this appears hopeful at best).

Mobalyz

Mobalyz (formerly SA Taxi) was enlisted by Vunani to collect debts from taxi owners to which Bridge had lent money.

This move required the physical movement of assets (repossessed taxis) to Mobalyz. At that time, Mobalyz was still part of Transaction Capital, however it sold this unit in September.

Read: Transaction Capital takes 48% profit hit after downsizing taxi business [May 2023]

Mobalyz has said that “early results on collections and sales appear promising”.

Some history …

Bridge Taxi Finance’s problems appeared after its founder, CEO and largest shareholder Martin Bezuidenhout passed away suddenly in January 2024. It remains unclear how Bezuidenhout died.

Thereafter it was learnt that Bridge’s operating company Mokoro had an overdue payment to Imperial Logistics.

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The business rescue practitioner appointed for Mokoro came to the conclusion that the business could not be rescued and an application to liquidate it was being prepared towards the end of last year.

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Since Mi-Plan ringfenced the assets with exposure to Bridge Taxi Finance in mid-February 2024 and informed Enhanced Income Fund investors, the fund has seen billions in withdrawals.

At the end of January 2024, it had R11 billion in assets under management. By the end of December, this had dropped to under R4 billion.

Adding back the value of the ‘side-pocketed’ fund takes this to R4.4 billion.

That means the fund has seen withdrawals of more than R5 billion (considering the write-downs in the retention fund).

In December, noteholders of the Martius and Redink instruments on the JSE – including Vunani Fund Managers – “unanimously” approved the delisting of these. It says the legal agreements to restructure the instruments will “proceed during the course of the first quarter of 2025”.

It says the delisting will improve the transparency of information shared between Mobalyz and noteholders as it will no longer be subject to JSE debt listing rules related to price sensitivity.

“Furthermore, swifter information exchange will enable noteholders to have greater impact in terms of steering Mobalyz to execute certain interventions to increase collection levels.”

Impact

While the Mi-Plan Enhanced Income Fund has been a standout performer over three-, five- and 10-year periods, the exposure to Bridge Taxi Finance has negatively impacted returns.

In calendar 2024, the main fund achieved a return of 10.9%, versus the benchmark’s 7.8%.

Add in the retention fund (-50.4% in 2024) and the combined (true) performance of the fund was just 5.5%.

Read: Minibus taxi industry only pays R5m in corporate taxes

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