eBusiness Weekly
. . . as Atlas Mara disposes several assets in Southern, East Africa
Tawanda Musarurwa
BancABC Zimbabwe is not among several ABC Holdings Limited banking subsidiaries that are set to be disposed by the Atlas Mara group.
The Botswana-registered ABC Holdings Limited is the parent company of a number of banks operating under the BancABC brand in sub-Saharan Africa, with operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
And with Atlas Mara announcing plans this week to sell off some of these banking assets, the Zimbabwean entity has been spared on the basis of its consistently strong financial and operational performance.
Atlas Mara said this week that it will trade off its banking operations in Rwanda, Zambia, Mozambique and Tanzania for a 6,27 percent stake in Kenya’s biggest bank by market value, Equity Group Holdings Plc.
“Atlas Mara Limited announces that it has entered into a binding term sheet with Equity Group Holdings Plc (EGH) for the exchange of certain banking assets of the company in four countries for ordinary shares in EGH.
“As part of the proposed transaction, EGH would acquire for shares in EGH Atlas Mara’s 62 percent shareholding in Banque Populaire du Rwanda (BPR) and, via the Company’s subsidiary ABC Holdings Limited, all of Atlas Mara’s indirect interests in African Banking Corporation Zambia (BancABC Zambia), African Banking Corporation Tanzania (BancABC Tanzania), and African Banking Corporation Mozambique (BancABC Mozambique). The parties would anticipate mergers of their respective banks within each of Rwanda and Tanzania.
“The company expects to receive as consideration approximately 252 482 300 ordinary shares of EGH representing approximately 6,27 percent of the pro forma share capital of EGH post-closing. This implies the consideration to be paid is the equivalent of approximately US$105,4 million,” reads part of the proposed transaction.
According to Atlas Mara, these “four countries contribute less than 2 percent of total group net income, with an implied aggregate return on equity of approximately 2 percent and represent substantial carrying costs in terms of capital and liquidity support”.
On the other hand, for the period ended December 31, 2018, Atlas Mara reported that its “business in Zimbabwe reported strong operating profits boosted by non-performing loan (NPL) recoveries, continued focus on cost reduction and fair value gains booked on some core banking and other assets”.
During the period under review, BancABC Zimbabwe doubled its after tax profit to US$10,8 from US$5,2 million in the prior comparable period on the back of improvement in net interest income.
The bank’s loan book grew by 18 percent to US$217 million.
Net interest income rose 18 percent from US$26,1 million previously to US$30,7 million in the period under review.
Non-interest revenue jumped 57 percent to US$23 million.
The Zimbabwe subsidiary’s total assets increased by 2 percent to US$539 million as deposits rose to US$392 million in FY2018 from US$385 million previously.
However, currency and exchange rate issues in Zimbabwe, resulting in “unrealised currency losses” for BancABC Zimbabwe had a negative impact on the group’s book capital.
But management has indicated that the Zimbabwean subsidiary is in the group’s long-term views.
“Our key strategic priorities for 2019 include completing the proposed transaction with EGH, achieving our shareholding objectives at UBN, working with UBN’s management to drive for further growth and profitability improvement at the bank, stabilising Zimbabwe operations in the current macroeconomic environment and fully streamlining the Atlas Mara platform to align with a simpler group structure,” said Atlas Mara executive chairman Michael Wilkerson.
