The privatisation of subsidiaries and associate companies of state-owned Industrial Development Corporation of Zimbabwe (IDCZ) is moving at a snail's pace as most offers are well below market value, an official has said.
In some instances, investors that would have been short-listed are failing to provide the proof of funding to inject as agreed capital, general manager Mr Ben Kumalo told Herald Business & Finance last week Thursday.
In 2018, Government approved restructuring strategies of IDCZ subsidiaries and associate companies through the State Enterprises and Parastatal Reform Framework.
The restructuring is not only confined to total disposal subsidiaries and associate companies, but also entails liquidation, privatisation and partial privatisation.
"Overall, our challenge in the privatisation process has been that some bidders for these public entities are looking at paying well below the market value of the investments and yet others fail to produce the proof of funds after we have short-listed them," Mr Kumalo said.
"As a result the process has been protracted as, in some cases, we have had to re-advertise as the potential investor(s) originally identified failed to pay or inject the agreed funds as new equity into the investment.
"Whilst some have the appetite they might not have the liquidity."
So far, IDCZ has disposed of its 51 percent shareholding in Almin Metal Industries, 49 percent interest in Stone Holdings, while Zimbabwe Copper Industries was liquidated.
Potential investors for Zimglass -- under liquidation-- Irazim Textiles and Travan Blankets have been identified.
The IDCZ identified a partner who injected capital into Amtec Motors thus reducing the IDCZ's shareholding from 55 percent to 27,5 percent.
IDCZ also received bids for Chemplex Holdings, which required between US$10 and US$70 million for recapitalisation.
Potential investors for Willowvale Motor Industries (WMI) and Deven Engineering have been short-listed.
"The IDCZ, working in collaboration with its parent Ministry (of Industry and Commerce) and the State Enterprises Restructuring Agency, has received expressions of interest in respect of WMI and Deven Engineering," Kumalo said.
The expression of interests EOIs have been evaluated and short-listed.
In the case of WMI the IDCZ now awaits guidance from Government on how to proceed with regard to the short-listed EOIs.
The evaluation and short-listing of the EOIs in respect of Deven Engineering are being finalised.
WMI is one of the leading vehicle assemblers in Zimbabwe. At its peak, it was producing 18 000 vehicles per year before production plunged. Some of the brands which WMI assembled include Mazda, Nissan and Toyota.
The disposal and its subsequent recapitalisation of WMI and Deven will dovetail with Zimbabwe's Motor Industry Development Policy, which is expected to see the sector ramping up capacity by 2030.
Under vision 2030, the Government is hoping Zimbabwe would have attained upper middle income status by 2030.
Mr Kumalo said there had been a lot of progress in identifying suitable partners for Chemplex.
Expressions of Interest in excess of 20 bidder were received.
He said IDCZ was looking for a partner to inject fresh capital into Chemplex, bring to the table improved production technology and external markets access.
The EOIs were received from both local and international companies.
Chemplex is a well-established group of companies and is of strategic importance to the Zimbabwean economy as it is a key supplier of fertiliser, municipal water treatment chemicals, livestock products, mining chemicals and other related products.
"It is therefore extremely important that due care be exercised in selecting the shareholder that will partner IDCZ in Chemplex. In that respect we expect the shareholders of IDCZ to take their due time and utmost consideration in making the final decisions in this regard," said Mr Kumalo.
Chemplex has six wholly owned operating entities being Dorowa Mine, GD Haulage, Chemplex Marketing, Chemplex Animal and Public Health (CAPH), Allied Insurance and G & W Minerals. It also owns 50 percent of Zimbabwe Fertiliser Company and 36 percent of Sable Chemical Industries making it a key player in the country's fertiliser industry. The partial privatisation of Chemplex is intended to ensure it is well capitalised and equipped to fully meet the national demand for fertiliser, water treatment chemicals and animal products at affordable prices for the foreseeable future, Mr Kumalo added.
Working with the financial advisors, the IDCZ received and evaluated a number of expressions of interest, finalised the necessary information memorandum for the use of the interested prospective investors and carried out a valuation of the various business units to guide the IDCZ in the negotiations.
IDCZ now awaits shareholder guidance on how to proceed with the transaction following the submission of expressions of interest and short listing of possible investors by the financial advisors to conclude the process.