HomeBusiness DigestFMB mulls Barclays dual listing

FMB mulls Barclays dual listing

After fending off 24 takeover bids to seize control of majority shareholding in Barclays Bank Zimbabwe this week, Malawi’s First Merchant Bank (FMB) is planning to set up a new group to be dual-listed on the Malawi Stock Exchange and Mauritius Stock Exchange as it consolidates its presence in the Southern African regional market.

By Bernard Mpofu

As first reported by the Zimbabwe Independent this week, British-headquartered Barclays Plc sold the stake in its Zimbabwean operation for US$60 million to FMB on Tuesday, putting an end to months of a fierce bidding war to take over one of the country’s iconic financial institutions.

Barclays Bank Zimbabwe was established in 1912, and has operated in the country continuously since then, making it a landmark feature on the local financial services landscape.

The bank, listed on the Zimbabwe Stock Exchange (ZSE), has over 1 000 employees and a countrywide network of 38 branches in main urban areas.

Barclays Bank Plc, which held 67,68% shareholding in the local unit, last year announced it was disposing of its African assets, including in Zimbabwe, to focus on British and American markets.

The remaining 32% of Barclays Bank of Zimbabwe’s shares are traded on the local bourse. Barclays Bank Zimbabwe, alongside the Egyptian business, was not part of the 2013 deal that saw Barclays Africa, formerly ABSA, acquire eight African operations from its parent company due to high local political risk.

In February last year, Barclays Plc announced it would conclude negotiations on the pull-out by June this year. This triggered a stampede for Barclays Bank Zimbabwe. A number of bidders have been scrambling to acquire the bank.

Sources say the deal, which was negotiated by local prominent corporate lawyer Addington Chinake of Kantor & Immerman, was finally signed after 24 bidders, mostly lowly-ranked financial institutions, expressed interest in the Zimbabwe Stock Exchange-listed firm. The other attorneys involved were Norton Rose Fulbright and Baker McKenzie of London.

Other bidders, according to sources, included an investment vehicle co-owned by former ABC Holdings chief executive Doug Munatsi, State Bank Mauritius and Adylwich LLC. It is also understood that should the deal, which awaits regulatory approvals, be finalised by Zimbabwe’s monetary authorities at least by August, FMB shareholders would swap their shares to a new entity called FMB Capital Holdings for an equal number of shares.

FMB Capital Holdings will then dual list on the Malawi and Mauritius stock exchanges.

“First Merchant Bank will now become a subsidiary of this group and it will eventually delist from Malawi Stock Exchange. The final step will be FMB transferring its shareholding in non-Malawi financial institutions such as Capital Bank Limited of Botswana, Capital Bank South Africa, Mozambique and First Merchant Bank Zambia to FMB Capital Holdings Plc,” a source close to the deal said.

The increase in shareholding under the employee share ownership scheme to 15% from 10% in the initial arrangement will make the deal one of the biggest of its kind since government gazetted the indigenisation policy compelling foreign investors to dispose of 51% stakes to locals.

Last week, a bidding battle to take over Barclays Bank Zimbabwe reached fever pitch when senior managers renewed their interest to assume control of the bank through a management buyout.

“While we are aware that Barclays Plc is currently in exclusive discussions with another bidder, we feel that it is important to update you on the progress we have made and that you are aware that we have funding in place and we are in a position to transact in a speedy manner should the exclusive discussions not result in a transaction,” wrote Msasa Capital in a letter dated May 6, 2017.

“The Non-Binding Proposal pertains to the purchase of what we now understand will be Barclays Plc’s remaining interest, i.e a holding of 57,68% in Barclays Bank Zimbabwe. Our understanding is that of the 67,68% stake of Barclays Zimbabwe that Plc holds, an effective 10% interest in Barclays Zimbabwe has been committed as part of an empowerment transaction and our Non-Binding Proposal has been prepared based on this understanding.”

Msasa Capital, a private investment and advisory firm fronted by ex-Investec executive Richard Honey and Border Timbers shareholder Heinrich von Pezold, was tasked by senior Barclays Zimbabwe management to draft the takeover proposal to Barclays Plc. According to a letter written by Msasa Capital, Old Mutual Life Assurance Company (Omlac) will become the majority shareholder in Barclays Zimbabwe, meaning Old Mutual will now effectively control three local financial institutions — Cabs, MBCA and Barclays Zimbabwe.

Apart from Barclays Bank Plc, major shareholders of Barclays Zimbabwe include Omlac and FED Nominees, which own 3,44% and 2,45% respectively.

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