African Century gets NMBZ shareholding

AFRICAN Century, a company underwriting NMBZ’s rights issue, will pick over 20% shareholding in the ZSE listed banking group after some shareholders withdrew support for the capital raising exercise, businessdigest has established.

This comes after key shareholders blocked an earlier private placement to raise capital for fear of diluting their shareholding.
Some of the shareholders opposed to a private placement then pushed NMBZ management to pursue a rights issue.

After initially throwing their weight behind a rights offer and pledging they would follow their rights, some shareholders are now against the company’s recapitalisation.
African Century, which  was founded over two years ago by former Morgan Stanley International chairman and chief executive Jonathan Chenevix-Trench, had earlier committed to spend  £3.6m on a 25% stake in NMBZ Holdings, the parent company of NMB Bank.
This comes after shareholders representing 21% of NMBZ’s total issued share capital voted against a resolution seeking to recapitalise the banking group.

The group’s shareholders approved the $10.28 million recapitalisation underwritten by African Century, with stockbroker Murray Lynton Edwards, representing proxies of 21.15%, voting against it.
The broker was thought to be representing Yusuf Ahmid who controls several investment vehicles including Drakmore (6.64%), Martcap (3, 63%), Elsha (3, 24%), Palisades 2, 55%), Efred (2, 23%), Kurpur (1, 19%), and Rosslare Enterprises (0, 65%).
It is not clear why the shareholder changed their mind after initially backing recapitalisation until a few days before the AGM.
Shareholders are being offered seven new shares for every 10 held at a price of 0, 89c.
All other resolutions were unanimously approved except capital raising.
CEO James Mushore described the decision as a “little curious.”
“I found the decision not to vote for the company’s recapitalisation a little curious after shareholders initially stopped a private placement. But all the significant shareholders say they will follow their rights. I am sure “lone” shareholders will decide on what to do.”
If Ahmid does not follow his rights, his shareholding could be diluted to about 10%.
Mushore told this paper two weeks ago that part of the US$10 million the company is raising will go towards meeting part of the bank’s capital requirements.

About US$2 million will go towards information technology while the remainder will be ploughed back into the business.
Mushore, who took management of the bank a few months ago after years in the United Kingdom, says African Century will now “fully” underwrite the rights offer.
Judging by past rights issues where companies got subscription rates of below 70%, African Century could emerge with over 20% of NMBZ’s total issued share capital especially in light of Ahmid’s decision.
Underwriters have snapped up significant shareholding in companies after rights issues were undersubscribed, leaving them with millions of dollars worth of securities.

A rights issue is when current shareholders are offered a ‘right’ to purchase additional new shares in the company at a discount to the market price on a stated future date, an appealing way of raising cash in Zimbabwe as financial institutions grapple with liquidity constraints and punitive interest rates.
Subscription rates have varied for the companies which were on the market and the lowest was 21, 9% for the ART Holdings, which left the underwriters with the burden of providing cash equivalent of the unsubscribed shares.

 

Chris Muronzi

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