MTI Investment SE and AML Finance Limited finalize a USD 500,000 convertible loan agreement

Under the terms of the agreement, MTI Investment SE will, via its Tanzania subsidiary MTI Advisory Limited, provide a shareholder loan to AML Finance Limited in Tanzanian Shillings (TZS) equivalent to USD 500,000, aimed at facilitating the business expansion of AML Finance Limited in Tanzania. The shareholder loan, with a duration of three years, carrying a 19 percent interest rate, reflects MTI's confidence in AML's growth trajectory and underscores its strategic vision for the Tanzanian financial sector.

The loan agreement is structured to include a conversion option, wherein MTI Investment SE has the option to convert the shareholder loan into equity based on the mutually agreed pre-money company valuation of TZS 24.3 billion (today equivalent to USD 9.4 million) after three years of loan disbursement.

Furthermore, the agreement includes provisions for collateral and personal guarantee of the promoter to safeguard the interests of MTI. AML Finance Limited will pledge its assets, both fixed and floating, as security for the loan, ensuring accountability and adherence to the terms of the agreement.

Specializing in microfinance, AML Finance Limited provides a range of products and services tailored to the needs of Small and Medium-sized Enterprises (SMEs), including loans and insurance. AML supports sectors like transport and logistics, trade and commerce, schools and other educational institutions, construction, and hotel industry. With a strong commitment to serving the financial needs of entrepreneurs and businesses across Tanzania, AML Finance Limited has built a reputation for excellence in the industry.

Given the active entrepreneurial landscape in Tanzania and the increasing financial literacy initiatives supported by the government, there has been a noticeable rise in demand for microloans to SMEs. This trend indicates promising growth potential. MTI intends to capitalize on this opportunity by partnering with AML to contribute to the economic development of the country and foster positive social impact.

AML demonstrates significant growth potential, showing consistent profitability and strong performance over the years. In fiscal year 2023, AML experienced a noteworthy increase of 27% in net profit and 30% in its loan portfolio. Its robust financial performance translates into promising returns for investors, with a return on assets (ROA) of 13% and a return on equity (ROE) of 25% in FY 2023.

AML is led by a skilled management team and a seasoned Board of Directors. Dr. Charles Kimei, former MD & CEO of CRDB Bank (Tanzania's largest private bank), serves as a distinguished board member. Dr. Kimei is widely respected for his significant contributions to the Tanzanian banking sector. Chairman, Managing Director, and co-founder is Reginald Massawe has spent more than 13 years building AML Finance Ltd. 

As a publicly listed entity on Nasdaq First North in Sweden, MTI Investment SE brings to the forefront its extensive expertise and international network, positioning AML Finance Limited for rapid expansion and enhanced market penetration.

"We are excited to partner with AML Finance Limited and support their growth initiatives in the Tanzanian microfinance sector," said Pontus Engström, CEO at MTI Investment SE. "This investment is a game changer for MTI Investment and is not only a symbol of our strategic on focus cash generating investments, but also a sign of our focus on larger and better performing companies. AML Finance has a solid, profitable and growing businesses, and our investment is a reflection of our confidence in the management team and business model. We do hope this is only the beginning of our collaboration."