German firm eyes BancABC takeover

Brian Benza
Staff Writer | Friday May 31, 2013 00:00

 

Botswana Stock Exchange (BSE) listed ABC is the holding company for retail bank, BancABC, which has operations in five southern African countries. ADC, which is already a majority shareholder in the Botswana Stock Exchange (BSE) listed bank, says it will undertake a mandatory takeover offer of P5.05 per share to shareholders on the BSE. Shareholders on the Zimbabwe Stock Exchange (ZSE), where BancABC has a secondary listing, will be offered 0.60 cents per share.

Following last year's rights issue, ADC increased its shareholding in BancABC from 23 percent to 41.7 percent, leaving other minority shareholders exposed to a takeover.According to BSE regulations, if a shareholder increases its stake to or above 35 percent in a listed entity, it would then be obliged to make a buyout offer to the rest of the shareholders.In a statement released this week, ADC said that its management and board has resolved to engage in pooling agreements with aligned investors in ABC Holdings Limited and additionally submit a mandatory takeover offer to the minority shareholders of BancABC.

'ADC has engaged in pooling agreements with two aligned minority investors of BancABC for a further 7,741,562 shares in the banking group. The underlying shares in the pooling agreements were purchased at a price below $0.60 per share,' said the company.  Through these two pooling agreements, ADC, which is listed on the Frankfurt Stock Exchange says it is guaranteed to maintain control of BancABC with 50.1 percent majority stake.In addition, ADC says it will undertake a mandatory takeover offer to minority shareholders of BancABC and offer a cash payment equal to the price at which ADC acquired a majority shareholding while acting as an underwriter of the bank's rights issue last year.

ADC's overtures come hot on the heels of another transaction in which subsidiary, the International Finance Corporation (IFC), an arm of the World Bank increased its stake in ABC Holdings to 17 percent through the conversion of a $12 million (P100 million) loan into equity. In an interview with Business Week, BancABC group CEO Douglas Munatsi said ADC would release an offer document in the next two weeks, which will provide details of the intention to offer.

'The offer is a fulfillment of the BSE regulations which ADC was supposed to comply with last year after acquiring the majority shareholding through the participation in the rights issue and then underwriting of the transaction.How much shares or what percentage stake ADC will have after the offer will be a function of the response from the existing minority shareholders,' said Munatsi.  BancABC is a regional banking group with 50 branches and 1,000 employees in five Southern African Development Community (SADC) countries - Botswana, Zimbabwe, Zambia, Tanzania and Mozambique.

As a result of the change in ADC's shareholding in BancABC, the German firm will consolidate BancABC in its financial statements latest at year-end. Dirk Harbecke, CE of ADC commented: 'ADC's vision is to strengthen its existing banking operations, expand into further attractive banking markets and to establish a pan-African banking group over the next 2-3 years. The strengthened equity position and shareholder base of BancABC is an important step to secure further access to funding. By engaging in pooling agreements and executing the takeover offer, we aim to firm-up our control in BancABC and to realise our vision together with the strong BancABC management team.' BancABC closed Wednesday's trading on the BSE at P4.65.