NMBZ shareholders yesterday approved a $15 million recapitalisation exercise through a private placement to help shore up the capital base of its flagship arm, NMB Bank.
Report by Bernard Mpofu
The recapitalisation exercise got overwhelming support at an extraordinary general meeting (EGM) where shareholders approved a share buyback, among others.
Under this capital raising initiative directors will raise fresh equity amounting to $14,8 million by placing 103 714 287 new ordinary shares to three strategic investors — AfricInvest Capital Partners, FMO and Norfund at a subscription price of $0,1430 per share.
The main purpose of the placement is to accelerate the bank’s organic growth in order to ensure compliance with the new minimum capital requirements stipulated by the Reserve Bank of Zimbabwe (RBZ). RBZ raised minimum capital requirements for commercial banks to $100 million from $12,5 million with banks expected to fully comply by 2014. The NMB placement and an earlier disposal of non-core assets are expected to grow the bank’s capital base to $45 million.
Under the central bank’s staggered recapitalisation exercise, banks are required to meet the $50 million threshold by June.
Shareholders also approved a conditional share buyback with the foreign investor, which seeks to satisfy the liquidity requirements of the investors when they wish to disinvest at their own discretion.
In its commentary prior to yesterday’s EGM, MMC Capital, the sponsoring broker for this transaction said the placement was critical in boosting the bank.
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“We are of the opinion that the proposals that have been brought forth by the board are of paramount importance as far as the future of the group is concerned,” MMC Capital said. “Recapitalisation of the bank is undeniably crucial hence critical for shareholders to support these resolutions.”
AfricInvest Capital Partners, a member of the TunInvest Group, which is a part of an investment and financial services group called Integra Partners, is expected to bring in new ideas into the group.
AfricInvest specialises in private equity, brokerage, asset management and corporate finance services.
FMO, a Dutch development bank and one of the world’s largest bilateral developmental financial institutions providing financing solutions for private companies in over 60 developing countries, will also increase its shareholding in the group.
The bank is a sound financial institution with an “AAA” rating from Standard&Poor.
Norfund, another key investor, is owned by the Norwegian government and manages a portfolio of about $1,3 billion. The fund invests with partners, Norwegian or foreign, focusing on renewable energy, agribusiness and financial institutions.
The main areas of investment are in Eastern and Southern Africa with regional offices located in Johannesburg.
