CBZ acquisition of ZB now in motion
THe acquisition of ZB Holdings by one of the biggest financial institutions in Zimbabwe, CBZ Holdings, has seen wheels starting to turn as the Competition Tariff Commission (CTC) acknowledged receiving the purchase proposal.
Both firms are listed on the Zimbabwe Stock exchange with CBZ Holdings having a market capitalisation of $1,05 trillion and ZB Holdings valued at $148,9 billion on the same market.
These takeover efforts, come after, in 2020 CBZ Holdings acquired a considerable stake in ZB Holdings through its Datvest nominees vehicle. CBZ Holdings in a transaction, the national Social Security Authority (NSSA) disposed of its 37,79 percent ZB Financial Holdings (ZBFH) shareholding in exchange for CBZ shares worth $640 million (US$7,8 million).
In terms of the transaction, for the 50 percent consideration, NSSA received 14,341 million new shares, valued at $640 041 800 in CBZ, representing a 2,15 percent stake, while for the 50 percent cash transaction, NSSA received US$11 646 889 after factoring in transaction costs.
As a way to cement the acquisition plot, Luxon Zembe has been appointed acting chairman of CBZ Holdings to superintend over the merger of the two. This comes barely two months after he was appointed the chairman of ZB Holdings.
CBZ Holdings on Wednesday, in a notice to shareholders, said Zembe takes over from Marc Holtzman, who has tendered his retirement as a director of the company and from the position of chairman, with effect from December 31, 2023.
In addition to that, CBZ Holdings Group chief e xecutive, Dr Blessing Mudavanhu, will also retire from his position effective December 31, 2023, and Lawrence nyazema will take over the post in an acting capacity.
The move had been dragged due to ZB Holdings’ inability to merge its Banking division with the ZB Building Society as there were ownership wrangles in the latter institution.
ZB Holdings had proposed to merge its banking division with its mortgage lending unit in order to meet the Reserve Bank of Zimbabwe’s (RBZ) minimum capital requirement.
Those efforts, however, for most part of the negotiations hit a snag because of an ongoing shareholder wrangle between an investment vehicle belonging to veteran banker, nicholas Vingirai, called Transnational Holdings Limited which has a direct holding in Intermarket Holdings Limited which subsequently controls the building society or mortgage lender.
Vingirai, through Transnational Holdings Limited, insisted that the merger between the bank and the building society/mortgage lender can only take place once the Government brokered resolution between Transnational and ZB Financial Holdings over what he called the scandalous and fraudulent acquisition of Intermarket by ZB Financial Holdings is fully implemented.
However, a source close to the deal said the dispute was resolved in June as the contesting parties decided to make a win-win situation.
“Vingirai and the other parties had a serious sit down from May to June in a series of meetings in order to resolve this dispute. A solution was brokered that he will be on the ZIMRE Holdings board in which Government has a significant shareholding as a settlement.
“The issue is said that Government laid out to him the benefits of the deal to the country and was offered that position plus other benefits in order to sanction the deal including the disputed shareholding,” the source revealed.
In October this year, ZIMRE Holdings issued a statement that Vingirai and Richard Morgan were now directors in the company.
“Following up on their election at the Annual General Meeting of Zimre Holdings Limited (ZHL) held on July 28, 2023 and requisite regulatory approvals, the board of ZHL is pleased to advise members and stakeholders of the appointment of Messrs Richard Morgan and nicholas Mugwagwa Vingirai to the board of directors effective July 28, 2023,” the statement reads.
The dispute between the two parties was longstanding and began as far back as 2006. That was about 17 years ago and there really was little prospect of that dispute and subsequent resolution brokered by the Government being implemented in time to meet the RBZ deadline.
In 2004 after the banking crisis that claimed the scalps of most of the indigenous banks in Zimbabwe, Vingirai had to leave the country and spent seven years in self-imposed exile after he was charged with contravening the country’s exchange Control laws.
He was absolved in 2011 of the charges of externalisation of foreign currency, however, the Government had expropriated his firm Intermarket Holdings in 2006. Since that time Vingirai had been on a crusade to recover his assets which were now in the centre of the dispute. ZB Financial Holdings comprises assets that belong to Transnational Holdings Limited. For the assets that were annexed from Vingirai, the Government duly transferred 22,7 percent of the shares in ZB Financial Holdings to the veteran banker.
More shares were due to Vingirai’s investment vehicle so that they correspond to the value of Intermarket Holdings at the time that the Government took it over.
In July 2021, 11 percent of ZB Financial Holdings shares were supposed to be transferred to Transnational Holdings Limited. This was pending. The dispute had been long drawn out with all kinds of proposals being made, ranging from demerging Intermarket from ZB to allocating shares to the veteran banker.
post-merger, it is believed the group will have five major divisions: banking, insurance, investment, property, and agriculture, and will be in a position to rival Zimbabwe’s biggest financial services group, Old Mutual Zimbabwe.