Afre was exposed to RFHL and its founder Patterson Timba to the tune of US$6,4 million and the financial services group is pursuing legal means to recover the money. Newly appointed Afre non-executive chairman Tawanda Nyambirai told Standardbusiness on Friday the group was now expanding the purpose of the capital-raising initiative to cover the exposure.
“Last year shareholders approved a rights offer to strengthen the balance sheet of the company and increase its capacity to underwrite new business,” Nyambirai said adding that the money to be raised would include the US$6,4 million exposure.
“What it means is that we are being prudent for business to carry on.
“We need to move in quickly and cover that (US$6,4 million gap) to ensure that the company can carry on with its business,” Nyambirai said.
Nyambirai said Econet would support the capital raising plans to calm the nerves of the regulator and customers.
“We have given that assurance to clients. We have assured them that we will support the rights offer and we will be there all the way,” he said.
Econet has 1,6 million subscribers on Ecolife, the mobile insurance partnership between the operator and First Mutual Life, Afre’s subsidiary. Nyambirai said the strengthening of Afre subsidiaries’ boards would be done to ensure that they are on sound corporate governance footing.
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Afre is cleaning its image, tainted by the developments at RFHL, one of its shareholders.
Problems at RFHL arose after its founder failed to honour an agreement with businessman Jayesh Shah over a US$5 million loan. The money was borrowed to recapitalise RFHL’s banking arm ReNaissance Merchant Bank placed under curatorship on Thursday.
