AfrAsia Bank capitalizes on regional growth; ups stake in Zimbabwe arm to 62.5%
CEO James Benoit explained that AfrAsia had identified an international investor coming in for $10 million with whom they would be partnering to invest another $10 million, infusing fresh capital of $20 million into the group. (Image: AfrAsia Bank)
Mauritian financial services major AfrAsia Bank announced that the issue of the new $20 million, approx Rs 600 million, capital by means of preference shares by its Zimbabwe subsidiary will be oversubscribed.
It may be noted that this issue has been structured in an attempt to meet capitalization requirements following the exit of corporate stakeholder Crustmoon Investments (Pty) Ltd.
With the active encouragement of the Zimbabwean authorities, the bank’s stake in AfrAsia Zimbabwe Holdings Ltd will thus increase to 62.5% after the exit of Crustmoon, far from the 49% maximum which Zimbabwe usually grants to the foreign shareholders.
Zimbabwe Finance Minister Patrick Chinamasa, who jointly addressed a press conference with AfrAsia CEO James Benoit, said, “We have been encouraging foreign-owned banks to increase their investment in local operations hinting that they would not be subjected to an ownership threshold limit of 49%.”
Thus, to encourage the bank to carry on developing strategies and become an important regional financial player, the government is allowing its stake to exceed the maximum permitted foreign ownership of 49% applicable to other sectors.
James Benoit explained that “We have identified an international investor coming in for $10 million with whom we will be partnering to invest another $10 million, infusing fresh capital of $20 million into the group.”
“Other local investors have also made commitments which will ensure that the issue is oversubscribed,” he said.
“We will continue to work with partner institutions to bring in more lines of credit and liquidity into the economy,” he added.
This move illustrates AfrAsia Bank`s objective to become an important regional player in the financial sector and also position itself strategically to tap into these investment flows in Africa.
Meanwhile, in a related development, the Bank has also taken note of the media reports in which Spiritage Zimbabwe Limited is said to be suing AfrAsia Bank Zimbabwe limited on various allegations including that of fraudulently converting client’s funds to its own use.
These reports are totally incorrect and contain substantial deliberate misrepresentations of AfrAsia Bank, according to the bank’s management.
AfrAsia Bank Zimbabwe Limited has thus taken measures within its legal rights to correct the situation and take the matter before the Courts.