Revelations emerged this week that Intermarket Holdings founder Nicholas Vingirai, chairman Michael Mahachi and Mashonaland Holdings boss Godfrey Gomwe were prime movers in the $32 billion pr
operty-buying deal that has eventually choked the diversified financial institution.
The arrangement witnessed Masholds pledge to snap up upmarket buildings countrywide worth $32 billion as well as 12 unregistered properties located on Fairway Drive, Borrowdale Brooke, Harare, worth $1,3 billion.
Masholds chairman Gomwe also chairs Anglo American Corporation Zimbabwe Ltd (Amzim), a key player in operations at the construction concern.
Mahachi on the other hand was chairman of Intermarket and vice-chairman of Masholds, while Vingirai was Intermarket chief executive officer.
Intermarket is the second largest shareholder in Masholds with 42 137 000 shares out of a total issued share capital of 166 304 000.
Property Development Associates (Pvt) Ltd, which is 79,29% owned by Intermarket, also played a central role in the whole business move that has resulted in depositors’ money allegedly being stuck in properties.
On March 5 former executive director Rindai Jaravaza replaced Intermarket founder and majority shareholder Vingirai as acting chief executive officer.
The move came after “imprudent banking behaviour characterised by non-performing insider loans” was unearthed by the central bank at the financial institution.
Vingirai, whose company Transnational Holdings Ltd owns a more than 70% stake in Intermarket, is now in the United Kingdom where he is understood to have other business ventures. Intermarket owns a 35% stake in Masholds.
“Vingirai is not on the run and will be back today,” Jaravaza told a hastily organised press conference on March 5.
The sentiments were expressed after the central bank had asked Vingirai and chairman Mahachi to step down from Intermarket.
Jaravaza insisted that Vingirai was on a two-day paid vacation for personal business in South Africa and would “definitely” be back.
Vingirai is however still abroad at a time when the Reserve Bank of Zimbabwe (RBZ) has now moved in and closed his institution for six months.
The Intermarket saga, unearthed by the central bank during its spot checks on financial institutions, is more like a movie penned in Hollywood.
“Only our discount house is in trouble,” Jaravaza told journalists at the press conference. “It is facing a liquidity crisis but we have been given guidelines by the Reserve Bank on how to solve our problems.”
Jaravaza however said Intermarket Building Society had applied for a $40 billion injection from the RBZ.
The Intermarket group is made up of Intermarket Discount House, Intermarket Banking Corporation and Intermarket Building Society.
Last week the group was placed under curatorship for six months.
The direction was served in accordance with the provisions of the Banking Act (Chapter 24:20).
At the same time the RBZ appointed Ngoni Kudenga of Kudenga & Company Chartered Accountants as curator.
The RBZ took the action on the basis of new information that had revealed “a serious dimension and magnitude of the challenges that Intermarket is facing and which have implications for the restoration of a safe and sound financial condition at the institution”.
The current troubles could have begun last year when Vingirai, as Intermarket CEO, Gomwe as Mashonaland Holdings chairman, and Mahachi as Intermarket chairman, decided to transform Masholds into a fully-fledged property investment and development company.
The bosses had concluded that the local and regional property market “has historically demonstrated an ability to provide real returns on investments over the longer term”.
“It is likely that Zimbabwe as a country is poised for a major infrastructure development phase over the next few years,” Masholds chairman Gomwe told shareholders in his letter dated October 6.
“It is the intention of Mashonaland to be a major participant in this
anticipated growth phase of the country.”
Asked by businessdigest whether the deal between Intermarket and Masholds had anything to do with the financial problems bedevilling his company, Jaravaza dismissed the issue.
“The marriage (between Intermarket and Masholds) had nothing to do with it,” he said. “We bought some stands in Borrowdale.”
However, the RBZ statement released last week when it closed Intermarket pointed to “assets acquired by insiders” which would be sold and the money put back in the banking institutions.
“The primary purpose of the curatorship is to protect depositors, preserve the assets of the Intermarket banking institutions and protect the stability of the financial system,” the RBZ said on March 12.
“The curator will, in due course, recommend to the Reserve Bank how the financial situation of Intermarket banking institutions should be resolved.”
The Masholds property portfolio according to information sent out to shareholders last year would be acquired from Amzim Anglo American Corporation Zimbabwe Pension Fund (AAACZPF), Anglo American Associated Companies Pension Fund (AAACPF), Richard Ellis Real Estate (Pvt) Ltd (RERE), Intermarket Life Assurance Ltd (IMH) and property minorities.
The deal was orchestrated by way of a rights offer to raise approximately $26 billion and through the issue of shares to acquire properties.
The offer, which received massive support from investors, was underwritten by Intermarket Asset Managers (Pvt) Ltd whose directors include Vingirai, Victor Muchatuta, a Mr G Muringai and a Mr J J van der Zwan.
The deal was given the go-ahead by shareholders at an extraordinary general meeting on October 30.
Shares were subsequently listed on the Zimbabwe Stock Exchange on November 24 .
Under the deal Intermarket Life Towers, one of Harare’s most prestigious buildings, would be snapped up for $11,5 billion. Intermarket Life Towers is currently owned by Property Development Associates (Pvt) Ltd, which is 79,29% owned by IMH, 4,855% by AAACPF, 4,855% by AAAZPF and 11% by Meikles Consolidated Holdings Ltd.
According to a list of the properties to be acquired at “open market values” as at September 1 as determined by leading independent property valuers Knight Frank, Masholds would have to fork out $32 billion for 14 upmarket properties and stands countrywide.
Among properties to be acquired were Charter House along Harare’s Samora Machel Avenue which houses the Anglo head office in Zimbabwe for $3,7 billion, Intermarket Life Towers for $11,5 billion and Chiyedza House in Harare, originally owned by Southampton Properties (Pvt) Ltd for $4,8 billion.
Southampton Assurance Com-pany of Zimbabwe and Southampton Properties (Pvt) Ltd, which subsequently changed its name to Intermarket Properties (Pvt) Ltd, are controlled by IMH.
Other prominent buildings on the shopping list included West End Clinic in Harare ($1,1 billion), Express Stores in Harare ($1,1 billion), and Intermarket Centres in Harare, Bulawayo and Mutare ($5,2 billion, $4,4 billion, and $2,2 billion, respectively).
“Money is stuck in property investments and Intermarket is now in serious liquidity trouble,” a property market analyst told businessdigest.