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SSCG on expansion drive despite economic hurdles

MAURITIAN-BASED Sub-Sahara Capital Group (SSCG) has been expanding its tentacles in Zimbabwe, acquiring a controlling stake in various listed companies straddling diverse sectors of the economy that include financial services, light manufacturing and retail.


The company acquired a stake in Gain Holdings through an investment vehicle called Corcovado Investments, which it jointly owns with two former Natfoods managers and SSCG holdings, through its vehicle in 2016.

Gain Holdings, which owns Gain Cash and Carry, was formed after Natfoods weaned off its depot business to its former managers, former FD Liberty Murimwa and former sales and distribution director Johnson Gapu.

The Competition and Tariff Commission (CTC) received a merger notification of the transaction entailing the sale and lease of Natfoods depots to Gain Holdings in July 2019, well after the merger agreement deal was signed in 2016.

The CTC raised concern over the merger, saying this was done without adhering to the requirements of the Competition Act.They were slapped with a ZW$4 million (US$48 019) penalty for notifying the CTC late about the merger SSCG holdings snapped up 25% shareholding in refrigerator maker Capri through its investment vehicle Annunaki. The transaction is highlighted in Innscor’s 2019 annual report. Through this deal, Innscor swapped its 50,1% shareholding in Capri for 100% shareholding in Skitap, its investment vehicle in Capri.

Further, Skitap would sell 0,1% of Capri to Catterson Marketing, such that shareholding in Capri is equally divided between Catterson and Skitap at 50% each.
Thereafter, a Mauritius-based entity through its vehicle Annunaki Investment acquired 50% of Skitap, thus acquiring indirect 25% shareholding of Capri.

To date the company has acquired shareholding in clothing firm, Edgars Zimbabwe, Innscor’s fridge maker Capri and wholesale chain store Gain Cash and Carry and Untu Capital, a micro-finance entity that offers the provision of loans and insurance services to small businesses and micro-entrepreneurs.

The Mauritian company last year successfully snapped up a 41% stake in Edgars Zimbabwe from South Africa domiciled Edcon. This was after Edcon was forced to restructure its operations after it went through turbulent times and nearly collapsed before being bailed out through a R2,7 billion (US$ 160 million) facility by several lenders, including the Public Investment Corporation of South Africa.

Already Edgars had a Rights Issue to raise ZW$70 million (US$840 336) which closed on 21 August 2020. No information about any other SSCG Africa’s investments and acquisitions is available on its website.

The company defines itself as “an investment management firm founded in 2009 and is focussed on investing across the African continent”.The company’s shareholders and board of directors are not mentioned on its website.

While the company is said to be originally from Mauritius, it has put a Zimbabwean address on its website. Efforts to get a comment from the company were unsuccessful.

Economist Victor Bhoroma highlighted that failure to disclose information was the discretion of shareholders, who sometimes do not want public scrutiny.
“I think most of the transactions are subject to approvals and the shareholders do not want it to be subject to public scrutiny now. That’s why it’s not on their website,” Bhoroma said.

He said the company’s local acquisitions are likely to be a long-term plan geared towards recouping investments once the economy stabilises.

“I think the acquisitions are not entirely a vote of confidence on the prevailing economic environment, but more of a long-term view by investors who are risk takers. Most of the counters in Zimbabwe are undervalued because of currency changes, debt and limited capital. This gives an opportunity to snap cheap assets which can turn profitable if the economy officially dollarises and disposable incomes improve locally, for example, if you wanted to buy Edgars two years ago, you will need to part double the amount you would part now,” Bhoroma said.

Economist John Robertson said: “It is good to have investors taking an interest in local companies as it shows some level of confidence. Our longer-term prospects do look good and such investors are usually looking long term. Let’s hope their confidence is not misplaced.”

SSCG is one of the few companies that have been investing in the country despite the tough business operating environment characterised by a crippling liquidity crunch, acute foreign currency shortages, low capacity utilisation and runaway inflation which has since surpassed the 800% mark.

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