Investors taking time to warm up to Harare

THE year 2014 concluded on Wednesday but it ranks as a year that rekindled investor interest in the country after major international companies made strategic local acquisitions.\r\n\r\nZimbabwe is generally maligned as an ineligible destination for foreign capital, but events in the past 12 months prove otherwise.\r\n\r\nInvestors are warming up to Harare.\r\n\r\nCritics argue that the country’s laws – in particular, the indigenisation and economic empowerment regulations – scare away investors.\r\n\r\nBut after the signing of mega deals involving China and Russia, estimated at US billion, and the acquisition of BancABC, Kingdom Bank and Redan Petroleum and Sakunda Energy by top international companies, there is now renewed belief that Zimbabwe is now ready to do business.\r\nThe Atlas Mara Deal\r\n\r\nThe acquisition of ABC, which is BancABC’s parent company, and African Development Corporation (ADC) by Mr Bob Diamond’s co-founded Atlas Mara ranks as a major development on the local financial markets.\r\n\r\nIn March, Atlas Mara, which was founded by ex-Barclays Plc chief executive Mr Diamond and 33-year-old African billionaire Mr Ashish Thakkar, announced it was acquiring 50,1 percent in ABC Holdings.\r\n\r\nMr Diamond and Mr Thakkar raised US5 million in December 2013 before listing their company on the London Stock Exchange.\r\n\r\nBut what makes the deal more attractive is the prospect of transforming BancABC into a technologically advanced financial services group given that Mr Thakkar’s business is biased towards information communication technology.\r\n\r\nMr Thakkar founded his company, Mara Group, which was importing computer parts including keyboards, mouses and desktops, in 1996.\r\n\r\nAs part of the deal, Atlas Mara also made a voluntary offer to acquire a majority stake in ADC, bringing total ownership in BancABC to 88 percent and a subsequent mandatory offer for the remaining 12 percent stake in BancABC.\r\n\r\nThis came after over 95 percent of ADC shareholders had tendered their shares for the swap.\r\n\r\nAtlas Mara’s ordinary shares and warrants were temporarily suspended from trading on April 1 when the company announced its intention to acquire a majority of BancABC and make a voluntary public offer to acquire 100 percent of ADC.\r\n\r\nThe acquisitions of BancABC and ADC means Atlas Mara now has major operations in five countries: Zimbabwe, Botswana, Mozambique, Tanzania and Zambia and minority investments in Nigeria and Kenya.\r\n\r\nAtlas Mara sees its strategy in sub-Saharan Africa’s financial services sector as a “positive disruptive force” buoyed by a strong capital position and acquisitions.\r\nPuma Energy\r\n\r\nPuma Energy acquired an undisclosed stake in Redan Petroleum and Sakunda Energy. The company’s head of corporate affairs Mr Andrew Gowers confirmed in July that it had acquired the “downstream” businesses of the two entities.\r\n\r\n“But we are not commenting on the size of the stakes or the considerations paid. Both companies will continue to manage their activities independently for the foreseeable future,” said Mr Gowers.\r\n\r\nThe deal was not plain sailing as authorities said it exceeded demands of the country’s indigenisation and empowerment regulations which require foreigners to hold 49 percent while locals hold 51 percent.\r\n\r\nPuma Energy has operations in 33 countries including Zambia and Botswana.\r\n\r\nIt is a joint venture between Trafigura, one of the world’s largest commodities trading companies, and Sanagol, an Angolan state-owned firm, on a 55/ 45 percent shareholding basis.