CFX Holdings, currently under curatorship, is winding down the operations of its asset management arm, CFX Asset Management Ltd, as part of a broad-based restructuring exercise.
The plan is to offload the asset management business which was heavily exposed to the collapsed ENG Asset Managers last year. The firm seeks to reopen three other divisions, CFX Bank, CFX Merchant Bank and the Leasing Company of Zimbabwe.
CFX took the decision after it realised it could not raise the new capital requirements of $10 billion set by the central bank for asset managers, from $500 million.
The closure of CFX Asset Management will bring to 10 the number of asset managers that have closed shop since January.
CFX has since last week been sending out letters to depositors and creditors notifying them of the decision to wind down business.
The majority shareholders are said to have called for a speedy liquidation of the asset management firm to salvage some value.
In one of its letters to investors dated August 25 and signed by the managing director, Amanda Mitumbili, the company proposes to pay creditors through Reserve Bank of Zimbabwe treasury bills that are expected to mature after two months.
The payment will be through a “transfer of money market portfolio totalling (amount owed) in the form of Reserve Bank of Zimbabwe treasury bills with a face value equivalent to (amount invested) maturing on November 16 2005”.
The asset manager in the letter also plans to pay out the full amount to investors, together with interest, up to December 17 when it was placed under curatorship due to a liquidity crunch and alleged fraud.
This week CFX was inviting investors to accept the offer. The central bank was said to be aware of these proposals and has given them the greenlight.
The closed asset manager will forfeit its licence.
CFX Asset Management plans to have completed the wind down of its operations by the time of maturity of the TBs given as payment to creditors.
The rescue plan for CFX Holdings, which is already being implemented, will see the group retaining only profitable entities – CFX Merchant Bank, CFX Commercial Bank and LCZ Limited, its leasing business. This will involve a recapitalisation of the commercial bank to the tune of $170 billion.
Under the new CFX structure, the three entities will fall under the direct control of CFX Bank as divisions.
The bank is expected to resume operations towards the end of next month with the application for re-listing on the stock exchange set for November.
The rescue plan is a direct effort of the majority shareholders who previously called for a demerger of CFX Merchant Bank from the Century Group.
The two camps are said to have agreed on the restructuring to salvage their investments in the merged group.