20 February 2013

Zimbabwe: Three New Investors for NMB

LONDON and Zimbabwe Stock Exchange-listed NMBZ Holdings Limited has received fresh capital amounting to over US$16 million from three foreign investors, a move that will double the size of the group's banking unit, NMB Bank Limited.

The three strategic foreign investors that have agreed to inject US$14,8 million into the group in exchange for 26,97 percent stake are Tunisian-based AfricInvest Capital Partners, Dutch Development Bank (FMO) and Norfund which is a Nowergian development finance institution.

Responding to questions from The Financial Gazette's Companies & Market (C&M), NMBZ chief executive officer, James Mushore, said the bank's outlook was bright as the relationship with the new investors would assist the financial institution in getting long-term facilities.

"This investment would double the current size of NMB. The new capital will enable NMB to grow, seeking more lines of credit with which to tackle the insatiable demand that there is for appropriately priced debt of the correct tenor," Mushore told C&M.

This initiative would see the bank raising equity capital of US$14,8 million and a further US$1,4 million in the form of 7 year subordinated debt from Norfund, putting the total capital raise to US$16,2 million.

The US$1,4 million debt was approved by the Reserve Bank of Zimbabwe RBZ) as Tier II Capital.

Mushore said the founder shareholders had supported previous capital raising initiatives and would support the current initiative. He said the shareholders had agreed to be diluted significantly to allow more capital into the bank.

"The founder shareholders have always acted in the best interests of all of the shareholders. While this means accepting further dilution in this private placement, it is with the intention of creating a bigger, more robust institution," he said.

"The foreign investors will exit when they realise their investment objectives. At that time if they elect to be bought back, NMBZ will buy back their shares and then cancel them. The effect of this will be to reverse the dilution for existing shareholders," Mushore said.

Mushore said the new investors were strong financially and would enhance NMBZ shareholder's profile.

He said FMO was a Dutch development bank with an investment portfolio of over EUR6 billion, making it one of the largest European bilateral private sector development banks.

Norfund is a development financial institution owned by the Norwegian government through its Ministry of Foreign Affairs.

AfricInvest invests jointly with FMO and has over US$700 million of assets under management.

"Each investor will invest just under US$5 million each. In addition to this, Norfund will provide a seven year subordinated loan of US$1,4 million. With this additional capital, NMB Bank hopes to be able to mobilise more lines of credit of appropriate tenor to be able to lend to SMEs, agriculture and mining sectors," Mushore told C&M.

Commenting on the US$100 million capital base requirement by the Reserve Bank of Zimbabwe by June 2014, Mushore said their proposal with the new investors included compliance at the end of 2015 that has been approved.

NMBZ met the Reserve Bank's minimum capital requirements of US$25 million by December 31, 2012.

"We are targeting full compliance with US$100 million by December 2015 as per our plan approved by the RBZ. I think we will retain the confidence of our stakeholders if we are seen to be complying with whatever the regulators say," he added.

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