The Securities Commission of Zimbabwe (Secz) is looking into whether NMB Bank and Zimre Holdings Ltd (Zimre) as well as a consortium of the Rudland brothers — Simon and Hamish — played by the book when the financial institution underwrote the group’s US$15 million rights offer early this year.
According to Zimre’s rights issue circular, NMB Bank were the underwriters.
However, Zimre’s shareholders are questioning the rate at which NMB sold shares to the consortium of the Rudlands. Many feel the bank was fronting for the Rudlands. NMB would not be drawn to comment on specific allegations, citing confidentiality. The bank only said: “Thank you for your email. We regret to advise that due to banker-customer confidentiality issues, we are unable to comment.”
This comes amid indications the financial institution could have withheld key information that could have influenced the National Social Security Authority and the Government of Zimbabwe to follow all its rights in Zimre, businessdigest has established.
Secz CEO Tafadzwa Chinamo said Nssa had requested the securities regulator to look into the circumstances surrounding the acquisition of a 40% equity stake in Zimre.
“We got a request to look into the Zimre issue. The request came in three weeks ago and we are looking into it,” Chinamo said.
Had the reinsurer made adequate disclosures on who was underwriting its US$15 million early this year, sources said Nssa would have followed its rights.
“If the circular had said the underwriter was the Rudlands, certainly there would have been considerations such as can we work with them if we allow them to pick up a lot of stock. Such things influence shareholders decisions.
Institutional investors have very different approaches from individuals and hence other shareholders see them differently. We feel NMB were dishonest and misled investors and the market at large,” a source said.
“From where we stand, Nssa should have followed its rights. We feel that Zimre and NMB did not make adequate disclosures on who the underwriter was. We believe this would have influenced the outcome of the rights offer. The investing community was not given adequate information on that deal contrary to listing requirements, which say companies must disclose information fully. We feel the rights of investors to information were prejudiced by the withholding of this material information.”
Nssa chairman Robin Vela told Newsday this week that the authority was “concerned with the rights issue” that saw the Rudland-led consortium becoming underwriters.
“We are investigating both internally and with other authorities such as the Reserve Bank of Zimbabwe (RBZ), Zimbabwe Stock Exchange and Securities and Exchange Commission of Zimbabwe to understand how that transaction happened. We are unhappy with that,” he said.
“One day we are told NMB are the underwriters, a day later we have Rudland as 40% shareholder.”
Vela said NSSA was concerned about ZHL, related-party issues and how the transaction came about. “It’s far from over from where we sit,” he said.
As at June 30, government and NSSA had 21,67% and 13,32% respectively in ZHL after they elected to follow part of their rights in the US$15 million cash call.
ZHL chaiman Benjamin Khumalo had not responded to the businessdigest’s enquiries a the time of going to print.
While the Zimre rights offer met other listing requirements such as having an underwriter, publishing the last date for shareholders to register to participate in the rights offer, the terms of the rights offer, the salient dates relating to the rights offer and the results of the rights offer, it lacked adequate disclosure on the identity of the underwriter, which other shareholders say prejudiced them.
It emerged last week that Nssa management had resolved not to follow all its rights in Zimre Holdings Ltd.
Nssa executives through a management committee assumed the powers of the board’s investment committee in the absence of the board.
The previous Nssa board, whose term of office expired in August 2013, was chaired by top lawyer Innocent Chagonda. He was deputised by corporate governance expert David Mutambara. Other members of the board were former Nssa general manager James Matiza, Chris Hokonya, David Govere, Joseph Kanyekanye, Cecilia Alexander, Rosa Dube, Kennias Shamuyarira, Ephanos Makiwa and Memory Mukondomi.
After the expiry of the board, investment director Shadreck Vera, finance director Patrick Mapani, Corporate Services director Tendai Mafunda and ICT director Bright Chidyagwai constituted the management committee that ran the affairs of Nssa for two years. The committee, sources said, resolved to follow 3% of their rights when they could have followed all its rights.
Sources said a Secz and the RBZ are looking at whether rules where broken when the Rudlands emerged with the 40% equity stake.