Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Agribank to sell stake for $70m

Agribank to sell stake for $70m

via Agribank to sell stake for $70m – DailyNews Live by John Kachembere  5 FEBRUARY 2014

Distressed Agricultural Bank of Zimbabwe Limited (Agribank) says it will soon float a tender to dispose of a 49 percent stake to private investors valued at $70 million following an evaluation of the financial institution.

The agro-bank — wholly owned by government — has been failing to perform its key mandate of providing agriculture finance due to undercapitalisation.

Its chief executive, Sam Malaba, yesterday said injection of fresh capital into the institution would help ease liquidity challenges as well as “boost agriculture production in the country”.

“We wrote to government last year seeking $50 million for recapitalisation but we were only allocated $4 million by the Finance minister in his national budget,” he told Parliament.

Agribank’s capital stood at $20,43 million as at December 31, 2012, against a regulatory minimum of $25 million. Apart from boosting the agricultural sector, Malaba noted that the institution’s recapitalisation would also help it access cheap offshore credit lines.

“If we get $50 million from government then the bank’s capitalisation will be over $70 million and then if we sell the 49 percent stake, that will be an additional $70 million to the bank.

“If we are capitalised to the tune of about $150 million it would make the bank attractive to international lenders,” he said.

Last year, government approved the move to offload 49 percent shareholding to strategic investors as a way of raising capital.

Malaba said a technical committee made up of officials from the ministries of Finance, Agriculture and Justice, Attorney General’s office, the central bank and Agribank was set up to conduct an evaluation of the bank.

“We are waiting for the Finance minister (Patrick Chinamasa) to take the papers to Cabinet for approval and then we can go to tender looking for equity partners.

Plans to find a strategic partner for Agribank have been on the cards for a long time and analysts believe it is important for a suitor to be roped in to recapitalise “one of the country’s most crucial banks”.

Market watchers assert that Agribank badly needs an investor who will inject fresh capital as the bank seeks to regain lost ground after posting an $3,7 million loss in the half year to 2013.

While economic analysts have supported the privatisation of Agribank, most farmer organisations are sceptical, fearing that the process might attract an investor who is reluctant to support local farmers.

Early last year, insiders told businessdaily that foreign institutions were among investors that submitted bids to acquire Agribank’s 49 percent stake.


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