In 2017, when Barclays decided to sell its Zimbabwe business to FMB Capital, a foreign bank, the deal became political fodder.
At a rally, Kudzanai Chipanga, then leader of ZANU PF’s youth league, screamed: “We are worried that Barclays is being bought by a foreign bank instead of locals. This raises the risk of foreigners sabotaging us.”
Opposition figure Tendai Biti, a former Finance Minister, chimed in with a dash of vintage Zimbabwean exceptionalism. “Malawi is one of Africa s poorest countries,” he said. “When one of its banks buys a major Zimbabwean bank, something is not right in the motherland.”
George Guvamatanga, who had headed the bank for years, was leading a consortium that was hoping to buy the bank. In the end, FMB and Barclays still got the okay and the deal went through.
Fast forward a few years later, and the political push for locals to be front of the line for any acquisitions is strong. Looking at how a number of deals in recent years have gone, that push may be getting stronger.
Under President Emmerson Mnangagwa, government’s strategy when major assets go on sale seems, increasingly, to be “keep it at home”.
From a cement company, a sugar estate to a big bank, when investments come up for sale, the signal from government has been that it prefers for sellers to look around for favourable local buyers first.
Here is what we have seen over recent times:
Tongaat Hulett: No sweet deal
Tongaat Hulett runs into trouble after some of its executives in South Africa decide to sweeten their company accounts. Zimbabwe’s Hamish Rudland almost takes over the company by offering to underwrite a rights issue. The deal falls through after opposition from shareholders and a sustained public campaign against Rudland. The company’s administrators then announce they are selling their assets to Karega, a mid-size Tanzanian sugar producer.
Zimbabwe’s Treasury Secretary, Guvamatanga, writes to the company telling them; you denied us the chance to buy this asset. It is of strategic importance to us. We would rather buy it ourselves. We are not sure this new investor will honour commitments made to Zimbabwe. These commitments include a plan to jointly expand plantations, which will benefit thousands of smallholder farmers. Guvamatanga slyly reminds Tongaat that they need the government as a friend if they are to hold on to their tenure or water rights.
In Zimbabwe, Tongaat produces over half the country’s sugar, and the thousands of farmers who are part of the outgrower scheme are an influential political base. For government, if Tongaat is to sell the sugar estates, it must not be to new foreign hands that cannot be trusted to keep things in the family.
In April 2022, Standard Chartered decides to divest from a number of businesses in Lebanon, Angola, Cameroon, Gambia, Sierra Leone, Zimbabwe, Jordan, and Tanzania.
Access Bank of Nigeria offers to buy the African businesses from Standard Chartered, including the one in Zimbabwe, according to press reports. Access Bank does succeed, buying all the African business, save for one – Zimbabwe. Another offer for the Zimbabwe business comes from the Vista Group, a financial services company based in Guinea. But, in negotiation with regulators in Zimbabwe, StanChart realises that the buyer has to be local.
The winning buyer is FBC Holdings, the country’s fourth largest bank by lending, which has put up US$34 million to take over Standard Chartered Zimbabwe.
FBC is majority-owned by NSSA, which holds 35%. Other major shareholders are the Public Service Fund, which is the second largest owner with 10%, and Mushayavanhu, who owns just under 7% through his investment company, Tirent. Cash Grant investments, a group of shareholders represented by DMH Law Firm, holds 4% of FBC.
Lafarge: Concrete friendships
In January 2022, France’s Holcim announces that it is selling its Zimbabwe unit, as part of a continuing global asset sell-off by the world’s largest cement company.
One of the companies Holcim talks to for a deal is Huaxin Cement, one of China’s biggest cement companies. Huaxin is the most likely buyer. First, Holcim is a shareholder in the Chinese company. Secondly, when Holcim sold its companies in Zambia and Malawi, it had chosen Huaxin. Huaxin had also recently bought Tanzania’s Marvini Limestone.
What follows are months of haggling, with numerous meetings in government offices. There is even a press conference by a pro-ZANU PF empowerment outfit, the Affirmative Action Group, which demands that a local shareholder be chosen. Sure enough, after putting together a consortium of local banks and pension funds, Fossil Mining is announced as the winning bidder in June 2022. It isn’t until December that the deal is completed.
Fossil is owned by Obey Chimuka, and is one of the key contractors on government infrastructure projects, including the Beitbridge highway project. Taking over a cement company means that it now has a major supply component in-house. Once again, a major asset was being kept “in the family”.
However, as soon as Fossil is done with the US$29.7 million deal, it is placed under US sanctions. It’s a factor that was to soon play on the mind of another cement company.
PPC: No solid local offer?
Early in 2023, there are reports that PPC Africa is willing to listen to offers for its Zimbabwe business, one of the most rewarding units in the group. The rumour mill says potential buyers include a Zimbabwean infrastructure company.
CEO Roland van Wijnen says any local buyer would have to show the money first. And, he says, with a side-eye on Lafarge, that a buyer must be a company not on US sanctions.
“If we are to be looking seriously at an offer, there are three considerations that we apply; number one is whether the value properly reflects the value of the business in terms of the DCF (discounted cash flows). Number two is whether the counterparty that gives the offer is creditworthy and can actually write out the cheque, and is not on the sanctions list preferably. And number three is can the deal be done swiftly, because we don’t want a protracted process,” van Wijnen says then.
GDI: Under the surface
In June 2022, Russia’s Vi Holdings announces that has left Great Dyke Investments (GDI), leaving the future of what is supposed to be Zimbabwe’s biggest platinum project at risk.
At a projected 860,000 ounces of platinum per year, the mine would have been the biggest mining venture in Zimbabwe. But the company struggled to raise capital, an effort made worse when Russia invades Ukraine and Western sanctions hit. Earlier, seeking funding, GDI had approached Zimplats for a possible deal. This did not happen, with Zimplats concerned about dealing with GDI’s partners.
When Vi Holdings did leave, there was never a question of seeking a fresh foreign shareholder. In steps Kuvimba, the local partners on the project, who became the majority shareholder. Kuvimba, however, doesn’t have the money to develop the project to the size originally planned, and now it is looking at cheaper ways of developing the asset.