ZIMBABWE Stock Exchange (ZSE)-listed NMB Holdings Ltd (NMB) this week officially signed a US$4,8 million equity purchase agreement with one of its three new foreign investors, which will see the appointment of new directors to the board.
The group signed a transaction worth US$4,8 million with Norwegian state-owned investment vehicle Norwegian Investment Fund for Developing Countries (Norfund).
Norfund, together with AfricInvest Capital Partners and FMO last month emerged as NMB’s strategic partners after investing a combined US$14,8 million through equity in exchange for about 27% of the bank’s shareholding.
Norfund also extended US$1,4 million tier two capital that will be availed to the bank as debt over a seven-year period.
At a signing ceremony, Norfund investment director Deepak Malik said he was set to represent Norfund on the NMB board following conclusion of the multimillion dollar deal.
“Only one member will be appointed for Norfund and I will be on the board,” Malik said.
“We have already signed the agreement. Once we get formal approval from the Reserve Bank of Zimbabwe for exchange control, we then make the investment and in the next few months we should be done,” he added.
Malik said the investment followed rigorous preliminary processes and was a sign of the company’s confidence in NMB management and Zimbabwe’s financial services sector as a whole.
Norwegian ambassador to Harare Ingebjorg Storfring announced her country was looking for more partnerships with Zimbabwe across the economy.
“When the board of Norfund approved their investment in NMB, I said Norfund, being a respected institution and taking the lead, more investors will come,” she said. “A delegation from Norway was in Zimbabwe recently and they met politicians and businesspeople. They agreed that we must invest in Zimbabwe now, not wait.”
NMB group CE James Mushore said the new deal was in line with the bank’s plans to grow value and improve shareholder profile.
“We wanted someone who brings in value to the bank and this will also enable us to grow NMB into a tier one bank,” he said.
The group expects the transaction to open doors for the bank in Europe, particularly lines of credit of up to US$350 million.
NMB founding shareholders will have their stake diluted to 12,48% of the group’s total issued share capital from 17,09% upon conclusion of the US$14,8 million capital-raising initiative.
When NMB first announced the deal, Mushore said: “Overall, it’s a clever transaction because we needed tier one capital to meet the RBZ capital requirements.”