MicroKing buyers to conduct due diligence: AfrAsia

HARARE – AfrAsia Zimbabwe Holdings Limited (AZHL) is disposing its micro-lending unit MicroKing Finance, with potential buyers expected in the country to conduct due diligence by mid-January 2015.

Its chief executive, Lynn Mukonoweshuro, said the interested investors were from the region and overseas.

“During the course of December and early January shortlisted investors will visit Harare to conduct their due diligence with a view to submitting final offers in mid-January,” she said.

“The proceeds of the partial disposal will be reinvested in the business,” Mukonoweshuro said, adding that the “processes take time to complete, but are well advanced.”

This comes as AZHL has engaged local finance group Imara Capital Finance to jointly market a medium term secured note, which is expected to raise an additional $15 million in liquidity.

Mukonoweshuro and James Benoit, chief executive of AZHL’s major shareholder AfrAsia Bank Limited (ABL), said in a joint statement that several prospective investors had also expressed interest in making equity investment into AZHL or its banking arm – AfrAsia Bank Zimbabwe Limited (ABZL).

“This note has been marketed to local, regional and international investors,” they said.

The note, to be drawn in tranches, is expected to generate incremental $15 million liquidity with the first tranche to be drawn towards the end of January next year.

“ABL is committed to raising capital for all its group operations to allow them to compete strongly in their respective markets, including in Zimbabwe,” Benoit added.

In November, Benoit told Business Live in an interview that they planned to raise up to $35 million to address ABZL’s capitalisation and solvency challenges.

He said the funds will be raised through a “combination of debt and equity”.

“We plan to raise any amount between $15 and $35 million,” he said, adding that they were also considering issuing bonds.

ABL — with assets worth about $1,6 billion — recently increased its stake in AZHL to 62,5 percent after acquiring former founder and chief executive Nigel Chanakira’s 33 percent shareholding.

Benoit said if raised, the capital will help ease the solvency challenges faced by AZHL’s flagship unit ABZL, which has imposed withdrawal limits to manage the crisis.

“The prevailing liquidity problems have been a challenge for us as well. We are working with the regulator (Reserve Bank of Zimbabwe) and we have received great support from the governor,” he said, further stating that ABL had so far invested a total $28 million in the financial institution.

Benoit — who co-founded and built ABL from the ground seven years ago — said investors and private equity groups in the region, and also locals, have expressed interest in their equity raising exercise.

He said in the meantime, ABL was not considering merging with any other financial institution.

“I am happy to build my own business at the moment,” he said.

He dismissed market speculation that ABL was reluctant to inject further capital into the Zimbabwean business because of lack of confidence in its leadership.

However, Benoit, who said ABL inherited non-performing loans when it invested into AZHL — formerly Kingdom Financial Holdings Limited — in 2012, refused to disclose ABZL’s current financial position.

“I cannot give figures, our results are coming out soon. But, we have made final provisions for the bad loans,” he said.

Despite the challenges, Benoit said he did not feel their Zimbabwean investment had a bad start, arguing that “it’s a long term investment”.

He said there are “signs of growth” in Zimbabwe considering the normalising trade relations and re-engagement with the international community.

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