Mauritius consortium eyes controlling stake in Zimbabwe’s Allied Bank
With the investment in Allied Financial Holding, several lines of credit will open for its banking unit to target rich Mauritian institutional investors. (Image: East Day)
According to reports in Zimbabwean press, a sum of $30 million will be invested by an unnamed Mauritius Stock Exchange-listed company for a controlling stake in Allied Financial Holding (AFH), a related firm of financial services entity, Allied Bank.
Allied Bank is a commercial bank in Zimbabwe, which has been struggling recently with liquidity issues. In fact, the Reserve Bank of Zimbabwe (RBZ) has been closely monitoring Allied Bank due to liquidity challenges and, as the regulatory minimum capital requirements in effect from December 2013 need to be abided, the primary aim of investing $30 million as capital is to allow the banking group to meet the regulatory minimum capital thresholds.
Also, with the investment in AFH, several lines of credit will open for its banking unit to target rich Mauritian institutional investors.
Such investment will, however, represent a threat for Zimbabwe’s Transport Minister Obert Mpofu, as his stake in the company stands to be significantly diluted.
An anonymous source spoke to The Herald, saying that Allied will be listed in Mauritius within two months by the Mauritian consortium.
“The investment will leave him (Dr Obert Mpofu) within the (individual bank ownership) threshold of the Reserve Bank of Zimbabwe and after listing he will be diluted completely,” the source said.
Concerning the second phase of the recapitalization of AFH, the source said that it is all about taking its banking subsidiary’s minimum capital level to $100 million in order to provide the group with enough time to work on a recapitalization plan and to meet the June deadline to submit a 2020 compliance plan.
On the other hand, in January, the RBZ acting Governor Charity Dhilwayo extended the banks compliance deadline for minimum capital of $100 million to 2020, while requiring financial institutions to submit compliance plans by June this year.
The sources added that after the acquisition, Allied Bank will refocus its business to investment banking, focusing on multi-million dollar deals that the group foresees in Zimbabwe in the near future.
“The bank will be transformed into a transaction services with transaction fees expected to drive the income of the Allied Bank more than anything else from infrastructure and capital raising deals. It is an issue of being able to identify external investors and packaging a deal that suits their investment criteria,” the source said.
Key players in the transaction include Terence Mukupe, the AFH group Chief Executive Officer. The newly appointed CEO is a proven leader and experienced banker with a great track record across several continents from Wall Street to Moscow, according to AFH chairman, Farai Mutamangira.
“Terence is leading a Mauritius-domiciled consortium to take a significant stake in the bank. Details of the consortium’s recapitalisation effort will be made public in due course. AFH has a great future ahead of it. The spirit of our institution is passion, perseverance and empowerment of all our clients. This will remain the focal point of our culture,” Farai Mutamangira said to The Herald.