Investor let us down, says AfrAsia

HARARE - AfrAsia Bank Limited (ABL) says its Zimbabwean banking unit, AfrAsia Bank Zimbabwe Limited (ABZL), collapsed after negotiations with an international investor fell through at the last minute.

The Mauritius-based group voluntarily surrendered ABZL’s banking licence to the Reserve Bank of Zimbabwe in February, paving way for the bank’s liquidation.

James Benoit, ABL’s chief executive, said discussions with the unnamed investor “had reached an advanced stage but we were unable to get through to a conclusive agreement on satisfactory terms and conditions”.

ABL — with assets worth about $1,6 billion — last year increased its stake in ABZL’s parent, AfrAsia Zimbabwe Holdings Limited (AZHL), to 62,5 percent after acquiring founding chief executive Nigel Chanakira’s 33 percent shareholding.

The group had invested nearly $30 million in the troubled Zimbabwean unit.

Late last year, ABL quarantined AZHL from the group’s consolidated accounts, a decision it said will “isolate any additional risks” as the Zimbabwean financial group was facing mounting solvency and viability challenges.

Arnaud Lagesse, ABL chairman, said “the Zimbabwe entities will cease to be subsidiaries of the Bank and will be held separately.”

At the same time, ABL announced plans to sell AZHL’s micro-lender, MicroKing, a move market observers said was a strategy by the former to recover its millions of dollars trapped in the struggling institution.

ABZL failed to meet RBZ’s $25 million minimum capitalisation whose deadline lapsed in June 2014.

As at September 30, 2014, the bank’s capital stood at $13 million.

However, following ABZL’s closure, AZHL said the disposal of MicroKing has been affected, though, due diligence processes were on-going.

In a memo to employees, the group said while discussions were still underway with a potential investor for the disposal of the unit, the recent bank’s licence cancellation has had negative effects on MicroKing.

“AfrAsia Bank Limited’s (ABL) made a strategic decision to exit Zimbabwe and they will be issuing a statement to that effect. As subsidiaries of the bank, MicroKing and AfrAsia Capital Management are also affected,” it said.

The group, last year said the due diligence was supposed to be conducted by mid-January, with investors expected to have submitted final offers in mid-January, after AZHL has engaged local finance group Imara Capital Finance to jointly market a medium-term secured note, which was expected to raise an additional $15 million in liquidity.

The cancellation of ABZL’s licence follows the collapse of Transport minister Obert Mpofu’s Allied Bank and placement under curatorship of Eugene Mlambo’s Tetrad Investment Bank.

 

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