eBusiness Weekly
Business Writer
FBC Holdings has put aside US$34 million in an escrow account for the acquisition of Standard Chartered Bank Zimbabwe although the full purchase price is yet to be determined, Business Weekly can report.
This comes as FBCH successfully submitted a bid for the acquisition of Standard Chartered Bank Zimbabwe (SCBZ) after it was put up for sale by Standard Chartered PLC following the decision to divest from a number of markets including Zimbabwe.
While the purchase price for the acquisition of all of the issued ordinary shares of SCBZ and the entire beneficial interest in the Africa Enterprise Network Trust (AENT) is not yet determined or set, FBCH has put aside the US$34 million “to demonstrate its capacity to execute the proposed transaction”.
The proposed transaction consideration will be based on net asset value (“NAV”) to be determined through a Completion Balance Sheet mechanism.
The Consolidated Completion Balance Sheet, which will combine the SCBZ and the AENT balance sheets (“Completion Balance Sheet”) will be computed by Standard Chartered Holdings (Africa) by no later than 45 business days following the successful fulfillment or waiver of the last condition precedent and delivered to FBCH.
To demonstrate FBCH’s capacity to execute the Proposed Transaction, an escrow account was set up in which FBCH, through FBC Bank Limited deposited a sum of US$34 million with Standard Chartered Bank UK.
“The Escrow Amount was based on the indicative NAV using a proforma Completion Balance Sheet computed as at 31 March 2023,” reads part of the abridged circular on the detailing the transaction released by FBCH.
As part of the post-acquisition plan, FBCH will optimise its commercial banking operations culminating into two major divisions, in the form of Wholesale Banking Division (the exSCBZ business) and Consumer Banking Division (the current FBC Bank).
FBCH believes this proposed transaction will result in the Creation of a larger, diversified banking portfolio with a combined asset base, customer base and geographical reach that is more resilient and competitive in the face of industry-wide challenges such as regulatory compliance and digitization.
The other benefit is that the new entity will leverage the two banking entities’ respective strengths, capabilities and competencies to create dynamic banking operations allowing the merged entity to enhance its loan underwriting capacity and enabling the Group to serve a broader range of customers
across different market segments.
“In addition to the 20,68 percent shareholding in Mash Holdings, SCBZ comes with an impressive portfolio of investment properties that will augment FBCH’s own vibrant portfolio,” reads part of the abridged circular.
The deal will also include a US$8 million legacy debt receivable from the Ministry of Finance and Economic Development.
Based on the pro-forma financial position of FBCH, net asset value per share will increase from $100,000 to $103,000 after the successful consummation of the proposed transaction.
The proposed transaction will be earnings per share accretive to FBCH shareholders as it will result in an increase in the EPS from $19 000 to $23 070 after the successful consummation of the proposed transaction.
However for the deal to go through, FBCH will seek shareholder approval at an EGM to be held on September 29, 2023.
The proposed transaction is also subject to fulfillment of several conditions precedent including approval of the Reserve Bank in respect of FBCH acquiring a 100 percent interest in a banking institution, together with accompanying approvals from the Minister of Finance, the Zimbabwe Stock Exchange and Securities and Exchange Commission of Zimbabwe the Insurance and Pensions Commission, the Zimbabwe Revenue Authority as well as the Competition and Tariff Commission of Zimbabwe.
