ZECO Holdingsâ€™ claims that its Initial Public Offering (IPO) was over-subscribed could have been misleading because the bulk of the shares on offer were actually bought by one of the existing shareholders.
Investigations this week revealed that contrary to claims that the IPO received overwhelming support from the public, the existing shareholders were the major beneficiaries of the offering.
Documents in the possession of businessdigest reveal that Tendai Savanhu who is currently the managing director of Zeco actually poured in $15 trillion to support the IPO.
Savanhu, who controlled about 3% before the IPO, bought 481 405 705 of the 808 million shares on offer, making him the biggest supporter of the public offering.
This means that Zeco actually raised about half of its targeted $32 trillion from Savanhu. Savanhu had initially applied for 606 428 571 shares using his company called Timicicus Enterprises. This means that after the IPO Savanhu controlled about 13%, making him the second largest shareholders of Zeco. Timicicus was registered in 2003.
Stockbrokers said this could have been a public relations ploy to give the impression that the IPO was well supported. A check of the allocation schedule also showed that very few institutional investors participated in the IPO.
The schedule also shows that TN Financial Services, which was acting as the financial advisor in the deal, helped support the IPO by buying about 20 million of the shares on offer.
Other participants in the IPO include some small investment companies and family trusts. These include Ljon Investments, a company controlled by Econetâ€™s financial director, Rugare Chidembo, and Coversite Investments owned by Econet boss, Douglas Mboweni.
However, with barely two weeks of trading the company share register as at Wednesday indicates that Savanhu now has 3,94% of the shares whilst Timicicus now has 3,37%. Savanhu and Timicicus are now placed on fourth and fifth position respectively.
Savanhu seems to have taken advantage of the surge in the price of Zeco share to sell.
Details on the share register point to the fact that Savanhu could have sold his shares to CBZ Nominees which is now the second largest shareholder with 10%.
CBZ was the underwriter for the IPO. Analysts said although they saw nothing wrong with Savanhu buying 60% of the shares on offer they were worries about the motive.
“There is a clear indication that they were trying to manage investor perception,” said one stockbroker. “Such a figure could indicate that the oversubscribed float was a managed PR ploy to excite would be investors before trading day.”
Other analysts doubt Savanhuâ€™s ability to raise $15 trillion.
Zeco raised $32,8 trillion which it said would be used for acquisition of equipment, accessories and raw materials.