Regional banking group ABC Holdings Limited (ABCH) has raised $50 million through a rights issue to capitalise its subsidiaries.
ABCH, which has primary and secondary listings in Botswana and Zimbabwe, is the parent company of BancABC. BancABC operates in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe and has a group services office located in Johannesburg, South Africa.
“This is a historic occasion for the group and positions us well for the future,” said the group’s chief executive officer Douglas Munatsi.
He said the funds would be utilised for the capitalisation of the banking subsidiaries, which have registered phenomenal growth in the last couple of years.
Munatsi said retail banking was not only a people and systems intensive business, but was also capital hungry.
“Now that the first phase of capitalisation is behind us, we intend to raise an additional $75m million — $100m by way of tier two equity to further bolster the operations,” he said.
African Development Corporation (ADC) bought into the regional banking group in 2011 through an open market deal after exiting Premier Finance Group, now Ecobank.
As a result of the rights issue, the German-based ADC now holds a direct shareholding of 41,7% up from 23%. ADC has also agreed to warehouse additional shares as a financing mechanism for the executive management team as a result its effective shareholding will be 50,4%.
The group is very excited about this development as it will result in alignment of interests between management and ADC, which is now the anchor shareholder of ABCH. The banking group said following the capital raise all the banking subsidiaries would either be in the top tier or upper second tier of banks in the various countries that they operate in.
Group chief financial officer Beki Moyo said the capital levels for the various subsidiaries would increase to $53 million and $52 million for its Botswana and Zimbabwe subsidiaries.
Capital levels for BancABC Mozambique will rise to $32 million, BancABC Zambia $26 million and BancABC Tanzania $20 million, making the banks operations fully compliant with the regulatory capital requirements. The Reserve Bank of Zimbabwe on Tuesday increased minimum capital requirements for all banks from $12,5 million to $100 million.
Last year, ABCH posted a P83 million profit for the year ended December 31 with Zimbabwean operations contributing 39%.