Econet to acquire EcoCash’s fintech firms for US$58,97 million

ECONET Wireless Zimbabwe Limited will purchase EcoCash Holdings Zimbabwe Limited’s (EcoCash) financial technology businesses for the equivalent of US$58,97 million. EcoCash was demerged from Econet on November 8, 2018, after all the telco’s financial technology (fintech) businesses were unbundled to form the former.

EcoCash then had its initial public offering over a month later, December 8, 2018, course to listing on the Zimbabwe Stock Exchange (ZSE).

However, since announcing its intention to repurchase all fintech businesses from EcoCash in February 2024, Econet revealed in a statement that the value of these firms was ZWL$509 billion as of January 16, 2024, translating to US$58,97 million.

“The proposed transaction is a scheme of reconstruction in terms of which, EcoCash Holdings will transfer to Econet, all the shares that it owns in the financial technology businesses, valued at ZWL$509 billion (equivalent to 521,861,057 Econet shares) with the result that the financial technology businesses shall become subsidiaries of Econet,” Econet said, in a statement yesterday.

“EcoCash Holdings shall remain with Steward Bank Limited as its only subsidiary. The financial technology businesses were valued at ZWL$509 billion, which translated to 80% of the 30-day weighted average market capitalisation of EcoCash Holdings for the period to January 16, 2024, being the last practicable date immediately before the transaction was announced to the public.”

The fintech business being unbundled from EcoCash are EcoCash (Private) Limited, VAYA Technologies Zimbabwe (Private) Limited, Econet Insurance (Private) Limited, Econet Life (Private) Limited, MARS Zimbabwe (Private) Limited and Maisha Health Fund (Private) Limited.

Econet said that the value of the fintech businesses was also equivalent to 521 861 057 Econet shares calculated using the 30-day volume-weighted average price of each Econet share for the period to January 16, 2024.

This date was used as the last practicable date as it was before the transaction announcement to the public.

Econet added:

“As part of the scheme of reconstruction and following the transfer to Econet of the financial technology businesses referred to above, Econet shall pay the agreed total consideration that is equivalent to 521 861 057 Econet shares, using 271 597 195 Treasury shares that represent circa 50% of the purchase consideration (shares consideration) and the cash equivalent of 250,263,862 Econet shares will be calculated using the 30day volume-weighted average price of each Econet share to the period of date of payment (cash consideration).”

The telco said that collectively, the shares consideration and the cash consideration would hereafter be referred to as the “total consideration”.

Post unbundling, the market capitalisation valuation for Econet was US$3,77 billion which has significantly devalued over the years to a current market capitalisation of US$548,55 million.

This is owing to the massive depreciation of the local currency and failure of regulatory authorities to allow Econet to charge cost reflective tariffs for its business.