Happiness Zengeni Business Editor
Government’S shareholding in Zimre Holdings has been significantly reduced following its failure to follow its rights during the $15 million offer. According to results, only 18,03 percent of shareholders followed their rights of the 750 million shares which were offered to raise $15 million.
As a result, 614 million shares representing 81,97 percent of the shares, were issued to the underwriter. The shares were issued on the basis of one share for every 1,041 ordinary shares held.
Government’s stake in the company has now been whittled down to below 25 percent. This is also the same Government which has been reluctant to offload shares in the counter indicating that the group was undervalued on the Zimbabwe Stock Exchange. Over the years there have been numerous offers tabled before Government which are above 2c.
The underwriter, who was acting through NMB Bank, will get around 40 percent in the group. After the capital raise, the company will now focus on growth both locally and regionally although analysts say the $15 million is a drop in the ocean compared to what the company requires.
It is not yet clear if an offer for minorities is going to be made. According to analysts, the $15 million might not be enough to warrant Government’s loss of half its stake in such a big company like ZHL.
“Yes, Zimre is only worth $7,7 million on the ZSE, but its assets are worth $160,7 million while its equity is worth $94,2 million.
“This means Government’s share on assets is approximately $68,79 million while the share on equity is worth approximately $40,3 million.
“So Government gave up almost half of its shareholding for just over $3,2 million instead of at least $34 million using assets or $20 million using equity,” said an analyst who spoke to this paper.
“I think these are the questions that should have been asked before agreeing to the deal.
“Is the company performing to its potential?
“Is Government getting any returns for the continued investment in the company?
“Is management doing enough to enhance shareholder value? “Is (Albert) Nduna and team sweating the assets that they have?
“Maybe a change of management would have done the trick.
“Another way to look at it is how much the new shareholders are willing to put into the company, $15 million is just not enough to get so much shareholding. Remember AfrAsia. We might end up with a shareholder who does not bring value to the business intentionally or because they don’t have capacity.
“Maybe they are just speculators waiting for the rainy day. But if they are going to bring value, then Government might get more for the reduced 22 percent shareholding than they were getting with 42 percent.
“Then there is also the issue of skills in Government corridors.
“Who was advising Government in this deal?
“Did Government just let Nduna and company tell them what the company is worth?
“Does Government have the necessary skills to do company valuations?
“ZHL had Corporate Excellence as Financial Advisors; what about Government?”