NMBZ becomes the second ZSE listed company to attract a foreign investor after OK Zimbabwe courted Investec Asset Management this year. Group CEO James Mushore says he is happy with the result.
He said: “It’s (the rights issue result) precisely the result that we wanted.”
African Century was the underwriter to the rights issue. This comes after minority shareholders initially opposed a private placement that would have given African Century a 25% stake in NMBZ fearing a possible dilution arguing they could follow their rights in the event of a rights offer.
Some of the shareholders opposed to a private placement then pushed NMBZ management to pursue a rights issue.
But even after throwing their weight behind a rights offer and pledging they would follow their rights, the same shareholders later opposed the rights offer.
African Century was founded over two years ago by former Morgan Stanley International chairman and chief executive Jonathan Chenevix-Trench.
The company had earlier committed £3, 6m, a 25% stake in NMBZ Holdings, the parent company of NMB Bank.
The group’s shareholders approved the US$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%).
Under the rights offer, NMBZ Shareholders were offered seven new shares for every 10 held at a price of 0,89c.
Mushore said US$10 million of the money will go towards meeting part of the bank’s capital requirements.
About US$2, 5 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 several years in the United Kingdom, is largely believed to be the key driver of NMB’s capital raising initiative.
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 ART Holdings, which left the underwriters with the burden of providing a cash equivalent of the unsubscribed shares.
ART sought to raise US$4,6 million but its shareholders managed to raise slightly more than US$1 million leaving CBZ and Interfin, the two underwriters, with US$3,5 million worth of shares.
OK Zimbabwe opened its rights offer on March 26 and 70, 4% of the 250 375 139 shares were taken up at US$0, 06 per share, representing the highest subscription rate since multiple currencies were introduced. This left the underwriter, Investec with the remaining shares and was left with 7% of the retailer’s total issued share capital shareholders after the rights issue. Investec also advanced a US$5 million loan to the company.