RenCap offloads CBZ stake

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Russian-based global fund Renaissance Capital (RenCap) has offloaded its investment in CBZ Holdings Ltd as it continues to liquidate its Zimbabwean portfolio investments.

Report by Staff Writer

In two separate trades on the Zimbabwe Stock Exchange (ZSE) in a week, a total 40 million shares representing 5,8% of CBZH’s total issued share capital changed hands in block deals.

The first batch of 20 million shares went through at 10,5 US cents a share on Thursday last week.

The second block deal of 20 million shares sailed through the market Wednesday this week at 11 US cents a share. The total value of the deals amounted to US$4,3 million.

Prior to the transactions, RenCap held about 88 million shares in CBZH, which was also its most-held asset. The transaction leaves the Russians with 48 million shares and indications are that they will continue to offload their stake.

CBZH, which has Zimbabwe’s largest bank by both assets and deposits, CBZ Bank, is one of the most undervalued counters on the ZSE.

Its market capitalisation, based on Wednesday’s closing prices, was US$75,26 million on a trading price of 10,61 US cents a share. The financial services group has a 1,87% weighting on the ZSE’s industrials index and is among the top 10 heavyweight counters on the bourse.

In the six months to June, CBZ’s total income rose 17% to US$64 million from US$54,8 million. A 26% rise in net interest income from US$33,6 million to US$41,4 million helped CBZ realise a 33,6% rise in net profit to US$18,3 million.

Operating profit in the same period rose 12,5% to US$26,7 million. Net income was US$64 million, up 16,8% from the comparable year ago period and making up 52% of the 2011 income.

The group declared a dividend of 0,132 US cents per share from a total dividend of US$903 071, an increase of 10% from the same period last year.

CBZH said going forward it would focus on increasing the quality of its earnings by diversifying its income streams through looking at enhanced investment banking operations and long-term insurance.

RenCap closed shop in Zimbabwe early this year, but kept its strategic investment positions. The company has, however, been offloading some of its investments on the ZSE in heavyweight counters such as Seed Co and Delta.

Market watchers say the move to liquidate is not being driven by the weak fundamentals in the country, but the structure of their fund. Zimbabwe’s portfolio constitutes a small percentage of the fund’s global portfolio and would be rated in the high risk-high return category, which is normally targeted for sale or for trading as soon as a target return is achieved.

Generally, the Zimbabwean market has been on a bullish trend as foreign demand for shares on the local bourse continues to rise but lack of volumes is forcing prices up. Week-on-week to Wednesday, the bellwether industrial index gained 0,7% to 154,71 points, from 153,70 points last week.

Few counters are benefitting from the momentum based on strong earnings growth. According to the ZSE daily trading report, foreign purchases are mainly going to companies such as Afdis, RioZim, Econet, Innscor and Delta.

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