The National Social Security Authority (Nssa) is disposing of its 37,79% stake in ZB Bank worth more than ZW$755 million (US$11,984 million) amid revelations that one of the bidders is a prominent businessman whose growing empire has tentacles in mining, energy, agriculture, health and the financial sector.
NSSA, a state-run pension scheme, has 66 528 608 shares in ZB and is disposing of its entire stake in the financial institution.
The ZB share was trading at about ZW$11,35 on the bourse as at Friday last week before the government ordered the closure of the Zimbabwe Stock Exchange to facilitate investigations into so-called illicit activities.
“Nssa’s stake in ZBH stands at 37,79% or 66 528 608 shares and we are looking at disposing the entire stake as part of our banking sector restructuring exercise,” Nssa’s acting general manager Arthur Manase said in response to questions from the Zimbabwe Independent.
“We are in the process of finalising the due diligence and going through the necessary governance approval processes.”
He said the transactions are being brokered by agents. The beneficial owners will only be revealed when the parties have signed non-disclosure agreements and are ready to consummate the deal.
“This is in the interest of evaluating the transaction based on merit. As things stand, Nssa is not aware of the parties that are represented by the respective agents,” Manase revealed.
He said Nssa has received three bids for the ZB stake.
“Three unknown players represented by their agents have expressed interest. For confidentiality purposes, we are unable to reveal the names of the agents as common law dictates non-disclosure of parties involved in such negotiations without their express consent. The winner can only be revealed once the evaluation process has been completed and all approvals obtained from the relevant authorities. Such transactions are covered by strict confidentiality requirements,” he noted.
One of the bidders, according to sources, is a businessman who has tentacles in various sectors of the economy which include mining, energy, agriculture, health and the financial sector with strong political connections.
“Going forward, in line with our investment strategy, we want to consolidate some of the sector investments to reduce duplications, improve efficiency and minimise capital requirements, especially for regulated sectors such as insurance and banking,” Manase said.
He said the goal of these strategic initiatives is to create a dominant investment which is financially stable and thus able to create shareholder value and consistently pay sustainable dividends for the benefit of pensioners in support of Nssa’s mandate.
The RBZ in its Monetary Policy Statement in February this year indexed minimum capital requirements of banks to US dollar equivalents such that banks classified as Tier-2 (commercial banks, merchant banks, building societies, development banks, finance and discount houses) are required to have capital equivalent to US$20 million. Tier- 1 banks, which are large indigenous commercial institutions, as well as all foreign banks, are required to have the equivalent of US$30 million by December 2020.
“Using the latest December 2019 capital positions and the current exchange rate, Nssa will be expected to provide additional capital of at least US$3,6 million or ZW$2,05 billion across the banking sector investee companies,” Manase pointed out.
“While some of the institutions may trade themselves into meeting the capital requirements, others may require additional support from shareholders. What is of greater concern is that these capital requirements are fluid as they are subject to exchange rates determined by the weekly auction system and therefore Nssa is not able to fund on these competing requirements.”