Compliance with the controversial indigenisation policy has become the only pending issue stalling the Barclays Bank Zimbabwe take-over bid by Malawi’s First Merchant Bank (FMB) amid fresh indications the Reserve Bank yesterday gave a nod to the deal, it has been established.
This comes as senior executives at the bank are still pursuing a management buyout (MBO) in one of the country’s iconic financial institutions.
Sources said yesterday despite increasing shareholding under the employee share ownership scheme to 15% from 10% in the initial arrangement, making 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, the Office of the President and Cabinet and the Indigenisation ministry raised a red flag on the takeover in what appeared to be an endorsement of the management buyout.
Central bank governor John Mangudya recently told the Zimbabwe Independent that the deal was close to being concluded.
Contacted for comment on the proposed MBO and progress on the deal of the deal, Barclays Bank of Zimbabwe managing director George Guvamatanga said: “As we are currently under cautionary, I am not able to comment on both of these matters.”
Barclays Bank Plc, which held 67,68% shareholding in the local unit, last year said 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 shares are traded on the local bourse.
Apart from Barclays Bank Plc, major shareholders in Barclays Zimbabwe include Old Mutual Life Assurance Company (OMLAC) and FED Nominees which own 3,44% and 2,45% respectively.
“The review of the deal has been completed and there are no adverse findings. So this take-over is expected to be finalised by end of September once the indigenisation issues are resolved,” a source familiar with the deal said yesterday.
“A circular announcing the change in shareholding, board changes and how the business will operate is also expected to be released in the coming weeks.”
After fending off 24 take-over bids to seize control of majority shareholding in Barclays Bank Zimbabwe, FMB, which will be taking over the majority shareholding in the Zimbabwe unit, 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.
Barclays 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.
Barclays Plc sold the stake in its Zimbabwean operation for US$60 million to FMB in June following months of fierce bidding.
Before FMB was announced as the new majority shareholder, a bidding war had erupted between a Barclays Bank Zimbabwe senior management consortium and FMB over one of the country’s oldest and most iconic banking institutions.
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 Bank Zimbabwe management led by incumbent managing director Guvamatanga to draft the takeover proposal to Barclays Plc.
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.
Other bidders, according to sources, included an investment vehicle co-owned by former ABC Holdings chief executive Doug Munatsi, State Bank of Mauritius and Adylwich LLC. It is also understood that once the deal is finalised, FMB shareholders would swap their shares to a new entity called FMB Capital Holdings for an equal number of shares.