A BUSINESS consortium led by former AICCO Africa Ltd CEO Happymore Mapara has snapped up a controlling stake in a troubled asset management firm after the investment company failed to meet the Reserve Bank capital threshold, businessdigest has learnt.
Sources this week said the consortium last month injected an undisclosed amount that translated to a 70% stake in Alpha Asset Management.
It is understood that the seven-year old capital management company invited new equity partners to bail out the firm as the March 31 deadline for the central bank statutory position of US$500 000 drew closer.
Poor performance on the ZSE and the money market, the source said, would threaten the survival of weaker firms. The bourse has this year failed to perform above expectations, a year after government adopted the use of multiple currencies.
Liquidity problems and limited lines of credit have resulted in a lacklustre performance of the exchange.
“The company (Alpha) issued additional shares after it became apparent that it could not meet the central bank capital requirements. This in turn diluted the shareholding of existing owners,” said a source privy to the developments.
“There is no cash circulating in the market as seen by the performance of the ZSE. This is a sign that shows the deeper waters in which some financial services companies find themselves in.”
Zimbabwe has an integrated financial services sector consisting of commercial banks, merchant banks, building societies, micro-finance institutions, stock broking firms, asset management companies and insurance companies.
Co-founder Henry Manzungu, according to the source, left the asset management firm to pursue a non-financial business. Neither Manzungu nor his co-founder Chris Hokonya could be reached for comment. When reached for comment, Mapara said he would call back but had not returned the call at the time of going to print.
Alpha Asset Management firm ironically became one of the first firms to be granted an operating licence at the height of the 2004 financial crisis that claimed several banks and other financial institutions.
Although it could not be fully be established how many asset management companies fully met the statutory requirements, businessdigest is reliably informed that a handful of asset management firms could soon be taken over by new investors.
The big players — ABC Asset Management, Imara Capital, Old Mutual Asset Management and Datvest––some of which have sound footing from parent companies, have reportedly met the deadline.
Last November, Legend Asset Management Company became the first casualty after the Reserve revoked its operating licence for failing to meet the capital thresholds.
An asset management company is an investment management firm that invests pooled funds of retail investors in securities in line with the stated investment objectives. For a fee, the investment company provides more diversification, liquidity, and professional management consulting service than is normally available to individual investors.
The International Monetary Fund last month warned that the financial services sector continued to trade on shaky ground amid growing fears of systemic vulnerabilities. This has resulted in a number of banking groups such as Kingdom Financial Holdings, MBCA Holdings, Interfin Holdings and CBZ Holdings consolidating their operations through proposed mergers, disposal of non-core assets and divisionalisation of subsidiaries.