FAST moving consumer goods company Cairns Foods Ltd is on the verge of concluding a deal which will see a South African investor acquiring a majority stake in the Zimbabwean firm, businessdigest has learnt.
This follows reports in July by our sister paper, Newsday that a South African-based international private wealth, multi-asset investment firm, Vasari Global Holdings (Vasari), had won the bid to a controlling stake in Cairns.
Vasari was said to be eyeing the 67% stake in Cairns which was disposed of by the Reserve Bank of Zimbabwe following a majority decision by the company’s shareholders and creditors to bring in a new investor.
Information with businessdigest shows top management at Cairns expect the deal to be concluded by mid-November.
Sources in the company said the deal was only awaiting approval from the Indigenisation ministry, now headed by Francis Nhema.
“The general feeling is that government should be flexible with indigenisation because investors are normally not comfortable giving up a majority stake when they put in their capital,” said a source close to the deal who requested anonymity.
Officials in the Indigenisation ministry confirmed the Cairns proposal was among hundreds of files which were yet to be approved by the minister.
“The file is in the ministry but it has not been approved yet by the minster. Actually this file has some issues because new letters keep coming in everyday, but it is supposed to be approved at the end of the week,” said a ministry official who could not be drawn to give further details, saying it would violate client privacy terms.
Contacted for comment, Indigenisation minister Francis Nhema referred questions on specific companies to the director for Indigenisation and Empowerment, Godfrey Sigobodhla.
Sigobodhla could however not be reached for comment as he was said to be out of his office.
Efforts to contact Indigenisation secretary George Magosvongwe were also fruitless at the time of going to print as he was also said to be out of his office.
Zimbabwe’s business environment has been largely viewed as unattractive due to policy inconsistencies, corruption and the Indigenisation and Economic Empowerment Act which requires all companies registered in the country to be at least 51%-owned by local black Zimbabweans.
Most economists argue the country should revisit the controversial policy with a view to making it more flexible to attract foreign capital.
Cairns was put under judicial management in late 2012, leaving 1 000 employees stranded, but judicial manager Reggie Saruchera of Grant Thornton Camelsa appears to have done a good job as top management has indicated a significant number of those employees were now back at work with the company managing to attract investors.
Cairns was put under judicial management after succumbing to a host of economic challenges that included lack of working capital. In July this year, the company voluntarily delisted from the Zimbabwe Stock Exchange.
Last year, the manufacturer reported a US$8,1 million loss for the year to August 2012 due to operational constraints, including a US$11 million debt albatross.