Africa Moyo Senior Business Reporter
The Diaspora Infrastructure Development Group (DIDG), which won the tender to recapitalise the National Railways of Zimbabwe (NRZ) to the tune of $400 million, is broadening its shareholder base to other Zimbabweans in the Diaspora.
The move is aimed at raising funds for working and transactional costs, among others.
In the company’s quarterly report for the period to September 2018, DIDG executive chairman Mr Donovan Chimhandamba, said they will use a number of instruments to raise the funds.
“DIDG will be expanding its shareholder base to Zimbabwe residents and the rest of the Diaspora through a number of instruments that are currently under consideration by our executive team and financial advisors,” said Mr Chimhandamba.
“To date, DIDG has done two rounds of limited subscription offers which were both oversubscribed.
“These two rounds are deemed to be the Venture Capital Funding (VCF) rounds, which were aimed at raising seed capital.
“This funding is being used to fund working capital and transactional advisory costs such as legal, corporate, tax and project finance structuring, Bulawayo office remodelling and other day to day matters related to the NRZ transaction.”
Mr Chimhandamba said to raise a larger equity cheque from the Diaspora, DIDG has retained the services of Imara Corporate Finance and Ernst & Young to prepare and launch a DIDG collective investment scheme in Mauritius.
“The aim is to allow Diaspora across the world to subscribe into DIDG. “One of our principal objectives is to promote Diaspora participation in the mainstream economy of Zimbabwe,” he said.
Subsequent funding rounds will take different forms in terms of investment instruments ranging from open-ended collective investment schemes (CIS), leverage and corporate finance from development finance institutions and multi-laterals financiers.
Mr Chimhandamba said DIDG believes there is scope for Zimbabwean banks and institutional investors to participate in company’s infrastructure programme.
DIDG projects have been given National Project Status, allowing it to issue a Prescribed Asset Note to the market allowing banks, pension funds, insurance companies and other institutional investors to participate in firm’s projects.
Imara has been retained as advisor and is preparing to issue a Prescribes Asset Note of $50 million in three tranches.
Local pension funds and life insurance companies are required by law to hold between 5 percent and 10 percent of funds under management in assets with National Project Status at the end of each three months reporting period.
DIDG’s desire to rope in more Diasporans comes on the back of reports that suggest there are four million Zimbabweans working outside the country.
The Diaspora has become one of the largest sources of foreign currency inflows into the country in the last decade, with remittances through formal channels estimated at over $1,4 billion annually while informal flows are pegged at over $3 billion.