Stanchart eyes more Zim deals

HARARE - Standard Chartered Bank’s (Stanchart)private equity arm is looking for more deals in Zimbabwe betting on a rise in consumer spending after years of hyperinflation, a senior executive said.

The British bank, whose private equity business has assets under management of about $4,5 billion, made an investment in Zimbabwean agri-business Ariston Holdings through one of its portfolio companies, Afrifresh Group, last year.

The transaction was worth around $20 million.

This comes as Stanchart — one of the four foreign-owned banks operating in Zimbabwe — is under pressure to comply with the country’s Indigenisation law, which compels foreign-owned institutions to cede 51 percent shareholding to black locals.

“We have been focusing on mining. We will move to the banking sector, we need to ensure banks respect and respond to the aspirations of the people,” Indigenisation minister Saviour Kasukuwere said recently.

“If they (banks) do not want to operate in this country they are free to go. They cannot take people’s money but refuse to lend to them,” he said.

Despite concerns about the indigenisation pressures and political risk ahead of a general election this year, Stanchart sees potential for high returns in a country that is “starved for growth capital” after being weakened by hyperinflation, said Peter Baird, the bank’s head of private equity for Africa.

“Standard Chartered Bank loves Zimbabwe and our appetite for equity risk in Zimbabwe is high,” he said, listing real estate, consumer goods and retail as the most attractive sectors.

Robert Mugabe, who formed a power-sharing government with rival Morgan Tsvangirai after a disputed 2008 vote, has set March 16 as the date for a referendum on a proposed new constitution. A general election is expected later in the year.

Baird acknowledged there could be risks attached to the election, but said so far Standard Chartered’s dealings with the government, for example over Ariston, had been relatively smooth.

 “They were very reasonable about the indigenisation plan (to increase local ownership of businesses) that we filed ... they were very reasonable about the perception of commercial agriculture being in foreign hands,” he said.

The private equity team also wants to be an early mover in a country that boasts a well-educated, English-speaking population, as well as a functioning banking system and capital markets, Baird added.

“Given the right policy framework and the right set of circumstances Zimbabwe will do just great,” he said.

Standard Chartered Private Equity has invested around $550 million in Africa since 2008, with about half last year alone.

It was also a co-investor with Carlyle Group LP and South African private equity fund Pembani Remgro Infrastructure Fund in pan-African agribusiness Export Trading Group, a deal announced in November.

Stanchart is also driving a deliberate policy to take advantage of the growing trade corridors both in intra-Africa and between Africa and Asia, which now runs into hundreds and billions of US dollars.

Duncan Woods, the bank’s cluster head for consumer banking, Southern Africa, recently said Sino-Africa trade, which had risen ten-fold in less than a decade, was anticipated to grow and strengthen, regardless of the toughening conditions in many parts of the world.

Woods said Africa presented a significant opportunity across multiple sectors and industries.

Its growth had been aided by favourable demographics, improved macro-economic stability and growing trade and investment flows with Asia and the Middle East, in which his bank had a major presence.

Duncan said over the past 10 years, bilateral trade between China and Zimbabwe had grown at an average pace of 33,6 percent per year, doubling to $800 million in the last two years as ties between the two countries continue to strengthen.

It is projected to hit $1 billion this year. Last year, Stanchart took 200 small to medium enterprises customers to China for networking, of which 40 were from Zimbabwe. — Business Writer/Reuters

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