HomeBusiness DigestUnflinching support for Kingdom's rights issue

Unflinching support for Kingdom’s rights issue

TWO major institutional investors this week vowed unflinching support for Kingdom Financial Holdings’ mega rights issue to raise $1,5 trillion for recapitalisation, saying they wanted to turn-around the banking subsidiary from “a good business into a great one”.

“From our perspective compliance with minimum capital requirements of approximately $1 trillion for Kingdom (Bank) is another step in the journey to catapult Kingdom from a good business to a great one,” said Douglas Mboweni, managing director of Zimbabwe’s largest telecommunications group, Econet, also a major shareholder in Kingdom Holdings alongside Meikles.

Commercial banks, currently compelled to hold $100 billion in capital, will be required by end of September to have capital amounting to US$10 million, or $1 trillion at the ruling exchange rate.

Mboweni said: “Banking sector investments, especially for this tier of indigenous banks, calls for a shareholder with a combination of patience and a long-term view. Unlike Meikles who have some dividend experience with Kingdom, our entry point as Econet was the March 2005 rights offer, at a time which is arguably the sector’s lowest point.”

Kingdom’s rights issue, the biggest in the history of the Zimbabwe Stock Exchange (ZSE), is intended to correct the market perception that Kingdom is a second tier bank in comparison to more established banks, by placing its equity capital in line with that of leading commercial banks, group spokesperson Farai Mpofu told businessdigest.

Bryan Thorn, who represents Meikles on the Kingdom board, said: “It is our view that this route is the best method of raising additional capital as it gives us existing shareholders the opportunity to preserve value, based on our historical investment and on-going commitment.”

Kingdom’s major shareholders, who effectively command at least 75% shareholding in Kingdom Financial Holdings, have pledged to capitalise the business to required levels. Related to this development, plans are at an advanced stage to restructure, consolidate and merge businesses as part of the capitalisation process. — Staff Writer.

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