The tie-up with ABL was the second recapitalisation initiative of the group’s three-pronged recapitalisation approach that involves raising money from existing shareholders, private placement and debt finance.
KFHL founder, Nigel Chanakira said, “We feel we are of the pedigree now following the link up with AfrAsia to go onto another bourse that is outside the Zimbabwean market. We will pursue the initiative within the context of where the money comes from. We are having inquiries that may well open the equation to a different listing.”
ABL recently snapped up a 35% stake in KFHL in a US$9,5 million transaction that helps Kingdom Bank Limited meet the central bank’s stipulated minimum capital requirements of US$12,5 million for commercial banks.
Chanakira said the listing would occur once the US$10 million debt finance deal is concluded.
“As such, timing of the re-listing of Kingdom is intricately linked to the conclusion of ongoing capital raising initiative aimed at strengthening the group’s balance sheet. It is the group’s considered view that listing should happen once the company is on a stronger financial footing so as to preserve shareholder value,” Chanakira said.
The group wants to return on the Zimbabwe Stock Exchange, as well as listing on the JSE in South Africa. KFHL had delisted from ZSE after its merger with Meikles, Tanganda and Cotton Printers had created the largest capitalised company on the bourse. A demerger in 2010 meant that KFHL has to return to ZSE again.
The KFHL anchor shareholder said the debt financing would be concluded by June and would be made easier by the partnership with the Mauritian banking group.
Debt financing occurs when a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt would be repaid.
“Bringing on board AfrAsia will mean even that debt finance that we had, the cost of that debt will be a lot lower than we had before because it changes the nature of who AfrAsia Kingdom is as opposed to Kingdom Financial Holdings. We are looking at better prices, structures that have been done by AfrAsia before,” he said.
“We can do a series of issues as opposed to being confined to one term structure in terms of debt finance that we will be raising.”
The KFHL/ABL partnership has resulted in the creation of AfrAsia Kingdom Holdings registered in Mauritius.
AfrAsia Kingdom Holdings now wholly owns KFHL, which is set to rebrand to AfrAsia Kingdom Zimbabwe Limited reflecting the new partnership.
Executives from ABL, led by CEO James Benoit, Ben Padayachy, GM and Head of Global Business and Suneeta Motala, head of Marketing and Public Relations, were invited to attend Thursday’s KFHL board meeting.
Benoit and Padayachy will join the board subject to regulatory approval from the Reserve Bank of Zimbabwe.
KFHL CEO, Lynn Mukonoweshuro, said the group would “go for a name change to embrace the partnership as we move into the future”.
She said other KFHL subsidiaries — Kingdom Bank, Kingdom Stockbrokers, MicroKing and Kingdom Asset Management will retain their names “but will of necessity have a member of the AfrAsia group as part and parcel of their rebranding”.