IFC snaps ABCH stake

HARARE - The International Finance Corporation (IFC) has acquired a 10 percent stake in regional financial institution ABC Holdings (ABCH) in a debt-equity swap deal.

Under the transaction, ABCH allotted 24 080 230 ordinary shares to IFC to settle a $20 million loan, including accrued interest.

In 2007, IFC extended a seven-year loan to ABCH to finance the group’s ambitious expansion programmes and provide working capital for its banking units.

According to the convertible loan agreement, ABCH agreed to convert the debt into equity.

On Friday, the group said IFC had decided to follow its option to convert the loan into ordinary shares with ABCH’s board approving the exercise.

ABCH said each new ordinary share will have the same rights as to distribution of profits and assets, and rank pari passu with each existing fully paid ordinary share in the company.

“Each new ordinary share and each existing ordinary share have the right to one vote per share,” said ABCH.

Market observers say ABCH’s union with IFC will result in the pooling of expertise in areas such as risk management and advisory services.

Furthermore, the broadening of the shareholder base will afford the group access to lines of credit, specialists training while enhancing ABCH’s ability to undertake large projects.

ABCH’s reinforced capital base will not only result in a greater degree of security and comfort for the group’s business partners, but the planned investment into business operations will also result in a greatly enhanced range and quality of service that the group avails to its customers.

Last year, IFC launched an advisory services programme to complement a $13,5 million investment in three banks under ABCH.

The Africa Micro Small and Medium Enterprises (AMSME) programme, along with the investment, was expected to help banks increase their lending, as well as develop tailored financial products for small and medium-sized enterprises (SMEs) in Botswana, Mozambique and Zambia.

The IFC hoped to build a platform that accelerated the rate at which commercial banks provide effective and efficient services to SMEs across Africa, enabling them to grow IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector.

The finance corporation has helped developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilising capital in the international financial markets.

In 2011, amid economic uncertainty across the globe, IFC helped its clients create jobs, strengthen environmental performance, and contribute to their local communities — all while driving the organisation’s investments to an all-time high of nearly $19 billion.

ABCH is the brand name of the company registered in Botswana, which has a primary listing on the Botswana Stock Exchange and a secondary listing on the Zimbabwe Stock Exchange.

The group’s BancABC subsidiaries operate in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe and has a group services office located in Johannesburg, South Africa. - John Kachembere

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