EcoCash gets nod to hand back units
ECOCASH Holdings Zimbabwe Limited’s shareholders have approved a scheme of reconstruction that will see the group transfer its Fintech business back to Econet Wireless Zimbabwe.
This followed an extraordinary general meeting (EGM) held on April 17, 2024, to seek approval for the transaction.
Subject to regulatory approval, EcoCash will transfer to Econet Wireless business units that include 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, in exchange for the total consideration of $509 billion. This is equivalent to 521 861 057 Econet shares payable partly in cash and partly in Econet Treasury Shares, according to the group.
"The number of Econet Treasury shares shall be determined using the 30-day volume weighted average price of Econet for the period to January 16, 2024, being the last practicable date immediately before the transaction was announced to the public," said company secretary Mrs Charmaine Daniels in a notice to stakeholders.
"The amount of the cash component of the total consideration shall be determined using the 30-day volume weighted average price of each Econet share for the period to the date of payment," she said.
The two companies are under the same control. The transaction will not affect the listing of the two entities on the Zimbabwe Stock Exchange (ZSE) according to the group.
“The envisaged Scheme of Reconstruction will not result in the delisting of EcoCash Holdings Zimbabwe Limited or Econet Wireless Zimbabwe Limited,” said Mrs Daniels in an earlier communication to shareholders.
Since its announcement, the transaction has generated interest on the market with people wondering how this would go and the rationale behind it.
However, in an announcement released recently, Econet has indicated that bringing the fintech business, including mobile money platform EcoCash and VAYA, back under its control, would create a more formidable entity.
The company sees an opportunity to leverage its extensive subscriber base of over 14 million and established delivery channels to propel the fintech businesses to another level. The telecoms giant is also cognisant of the significant shift in the market landscape since the 2018 demerger.
Regulatory changes and evolving market dynamics have rendered some of the initial justifications for the separation obsolete. By reuniting the entities, Econet argues that it can streamline operations, improve efficiency, and offer a more comprehensive suite of products and services to its customers.
The telecommunications group said the combined entities had lost significant value post-separation.