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TN poised for ISB Securities takeover

TN Financial Holdings is close to taking over ISB Securities, businessdigest has learnt.

The stock broking firm becomes the second securities company to be snapped up by new investors after a consortium led by former Premier Bank boss Exodus Makumbe acquired NDH Securities a few months ago.

TNFH CEO Tawanda Nyambirai this week confirmed his group was on the verge of acquiring one of the country’s oldest stock broking firms, but still needs regulatory approval.

“It is correct that we entered into an agreement to acquire 100% of ISB Securities which is owned by Geoff Mhlanga,” Nyambirai said. “However, the agreement is still subject to regulatory approval.”

Asked how the firm would survive under the prevailing environment, he said: “We are one of the largest contributors to transactions that take place on the ZSE. Last year alone we referred transactions of a value exceeding US$50 million to stockbrokers. We are currently dealing with four stock broking firms, but once we have acquired ISB, all transactions will be directed towards this firm.”

Mhlanga could not be reached for comment.

In April, ZSE CEO Emmanuel Munyukwi told businessdigest that low trades on the market were threatening the survival of stock broking firms.

Stocks on the ZSE have been falling after government gazetted empowerment regulations compelling foreign companies worth more than US$500 000 to “cede” controlling stakes to black Zimbabweans.

Although the regulations were reviewed recently, the market remains jittery.

Analysts are expecting some of Zimbabwe’s 20 stock broking firms to merge should the market continue to face liquidity problems.
Stockbrokers generate income from brokerage fees charged on investors. The finance ministry, however, slashed the fees by half early this year in anticipation of a bullish market.

In the 2010 budget, Finance minister Tendai Biti cut transactions costs by 50% on the ZSE to 3, 21% from 7, 5%. This means that Zimbabwe’s transactional costs are now comparable to those prevailing in the region.

Last year the Securities Commission of Zimbabwe (SEC) suspended ISB Securities from trading on the ZSE after it accused the firm of failing to comply with the commission’s requirements. The dispute emerged when the ISB allegedly stopped SEC inspectors from investigating trust accounts arguing that only chartered accountants were empowered by the Securities Act to undertake this role. The three-week suspension was lifted after the matter was taken to the courts. Ironically, the company was represented by a law firm in which Nyambirai is a senior partner.

 

Bernard Mpofu

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