Tuesday’s meeting is the first formal approach by treasury for NSSA to move in and rescue RFHL’s arm, ReNaissance Merchant Ba-nk (RMB) is technically insolvent, according to Reserve Bank of Zimbabwe investigations. Such investment would result in NSSA wholly owning RFHL.
Finance minister Tendai Biti indicated two weeks ago that a well-established investor had been found to save RMB from collapse but no formal contact hasbeen made with NSSA.
Standardbusiness was told that after Tuesday’s meeting, NSSA now wanted to examine the state of affairs at RFHL.NSSA has already requested the central bank for its comprehensive report on RFHL to assess the state of the group and find out whether it would make commercial sense to invest in it.
“The due diligence will determine how much NSSA has to pay to assume 100% of RFHL.”NSSA confirmed in the Tuesday meeting that a cabinet approved proposal had been handed over to them “for NSSA to invest a certain amount of money in ReNaissance Financial Holdings Limited”.
“The proposal does not prescribe how NSSA should invest in ReNaissance. The approach is left to NSSA management and the board. NSSA management is currently approaching consulting firms in order to put together a business case on RFHL,” a spokesperson said. “The business case, which will include a recommendation on the most ideal approach to this assignment, will be presented by management to the NSSA board as soon as it is ready.” the spokesman said.
How RFHL fits into the NSSA scheme of things
Besides wholly owning RMB, RFHL also owns ReNaissance Merchant Bank (RMB), ReNaissance Securities (RS) and ReNaissance Capital (Uganda). It also has a 32% shareholding in Afre Corporation.
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NSSA has been using RMB to lend out money to companies and would pay a fee to the bank. With its takeover of RFHL complete, it would now lend out money, cutting on costs such as paying out fees.
With RS in the bag, it means NSSA would have its own securities firm and again cut on costs, according to people familiar with developments. What is also interesting for NSSA is RFHL’s 32% shareholding in Afre Corporation. Afre has interests in insurance and properties.
Afre’s arm, Pearl Properties, has various properties across all cities and towns and NSSA was considering investing in property to diversify its assets class.
However, for the plan to sail through there has to be an agreement with Jayesh Shah, the Indian businessman who has an RFHL share certificate of 60%.
Shah and RFHL founder Patterson Timba are in dispute over capital uplift of no less than US$25 million attached when the latter borrowed US$5 million to capitalise RMB in 2009.
The spokesperson said a consultant has been tasked to analyse the status of Shah and would recommend how to deal with the shares held by the Indian businessman.
In addition, NSSA is an active player on the Zimbabwe Stock Exchange but pays out brokerage fees since it does not have a securities company.
