THE People’s Own Savings Bank (POSB) has gained a foothold in CFX Financial Services after mopping up over 20% of the financial institution’s
shares issued under a $1,8 billion rights issue, the biggest money raising venture ever undertaken on the local bourse.
Analysts began warning of a possible reverse take-over of CFX by the POSB, saying the Reserve Bank of Zimbabwe-controlled Allied Financial Services, which held a 15,9% stake in CFX, was likely to dispose of its shareholding to the POSB after failing to follow its rights.
“This is a precursor to a possible reverse listing,” a top market analyst, who refused to be named for professional reasons, said this week.
The rights issue was subscribed to the tune of 77%, a 23% under-subscription. This was in line with businessdigest’s forecast that the mega rights issue would be undersubscribed by at least 20%, and that some key shareholders, including the Allied Financial Services, were unlikely to follow their rights.
Businessdigest reported late last month the surprise appointment of POSB as the underwriter to CFX’s rights issue which had taken the banking sector by surprise.
There had been strong suggestions prior to POSB’s appointment that Zimre Holdings would underwrite CFX’s rights issue after initial proposals for the cash-rich institution to take up a stake in CFX.
The move effectively meant that Zimre’s bid had hit a brick wall, either due to disagreements with CFX management and key shareholders or simply because of lack of interest in the company on Zimre’s part.
It was indicated by this newspaper that CFX’s mega-rights issue was likely to be too expensive for many of the banking institution’s fringe shareholders.
POSB, itself a cash-rich institution, stood a chance to pick up shares in the bank that were not taken up by respective shareholders during the rights issue.
This was the first time that the 102-year old POSB, which is wholly government-owned, has underwritten any rights issue in the history of the local bourse.
The POSB is expected to snap up the over 20% rights issue shares not taken up by shareholders. While 15,9% CFX shares were held by the Allied Financial Services, 39% of the shareholding was in the hands of depositors.
Indications are that the majority of CFX depositors, whose ownership of CFX shares was made through a conversion of their deposits into shares earlier this year, also failed to follow their rights.
The POSB, formerly the Post Office Savings Bank, was established in December 1904 and commenced its operations through the Post Office network.
Since its creation, the bank operated as a statutory fund with no legal entity status. In 1965 the Post Office Savings Bank Act (Chapter 249) was promulgated providing for the administration of the savings bank by the Post and Telecommunications Corporation on an agency basis.
This position remained until April 1 2001, when a new Act, the People’s Own Savings Bank of Zimbabwe Act, was promulgated, establishing the bank as a corporate body thereby effectively de-linking it from the Post and Telecommunications Corporation which itself has been unbundled into three commercial operations.