Seven bidders for starafricacorporation

February 11, 2021

TINASHE MAKICHI

The Zimbabwe Asset Management Corporation (ZAMCO) has short-listed seven bidders vying to acquire its controlling stake in the listed diversified conglomerate, starafricacorporation, Business Times can reveal.

ZAMCO took control of 58% shareholding worth about ZWL$32.7m in troubled firm in 2017 after paying off banks that were closing in on the Zimbabwe Stock Exchange-listed entity.

ZAMCO then converted the debt into equity.  

ZAMCO chief executive officer, Cosmas Kanhai, said this week six local and one foreign bidder were vying for the stake.

He, however, declined to reveal the identities of the seven bidders.

“Remember we are not there to stay long in companies. We have a finite life. Once a company has turned around, we then disinvest. This is the case with starafricacorporation,” Kanhai told Business Times this week.

“We have received seven bids from prospective buyers, one international and six local, which we will adjudicate after the lockdown.

We are currently closed during this lockdown.”

Kanhai said starafricacorporation has turned the corner and now operates profitably.

“So our objective after the balance sheet restructuring we did for starafricacorporation has been achieved,” he said.

ZAMCO is a special purpose vehicle created by the Reserve Bank of Zimbabwe in 2014 to deal with the problem of growing non-performing loans (NPLs) in the financial services sector.

The NPLs peaked at 22.14% in September 2014.Fears were growing that the default rate would result in banks cutting back on lending to productive sectors of the economy.

But, the NPL ratio has been reduced to about 5%.At the end of November 2020, ZAMCO said it had collected more than ZWL$700m out of the ZWL$1.18bn NPLs it assumed since 2014.

As part of efforts to maximise on collections, ZAMCO has resorted to debt-asset swap mechanisms.

ZAMCO implemented the debt-swap system after facing challenges with some borrowers who have been delaying the process when dragged to courts. 

The takeover of bad loans is also in line with international trends which saw the creation of asset management companies such as Great Wall, Orient, Cinda of China, KAMCO of Korea, IBRA of Indonesia, Danarharta of Malaysia, SAREB of Spain and BAMC of Slovenia and AMCON of Nigeria to resolve the NPLs challenge. 

Notwithstanding the turbulent environment, ZAMCO managed to implement various strategies that maximised recovery from means other than loan repayments such as debt asset swaps.

Analysts say the recoveries to-date demonstrates that Zamco was not formed to simply acquire and warehouse or write-off NPLs as all amounts acquired remain due and payable.

Zamco has powers to acquire, reschedule, dispose of, hold, manage or otherwise settle NPLs of banking institutions.

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