TAWANDA Nyambirai could be smiling all the way to the bank after agreeing to let go his shareholding in TN Bank in return for shares in Econet Wireless.
REPORT BY NDAMU SANDU
According to the deal announced last week, the bank would become a wholly-owned subsidiary of Econet Wireless, with Nyambirai stepping down from the board after 14 years.
However, the lawyer-cum-businessman, will sit on the board of Econet’s largest shareholder, Econet Wireless Global.
The deal would see TN Bank minority shareholders being offered Econet Wireless shares in exchange for their stakes in the bank.
TN Bank shareholders were going to be diluted in the recapitalisation exercise of the bank to have US$100 million in minimum equity capital by June 30 2014 set by the central bank.
While TN Bank had already surpassed the US$25 million required in the first phase, it still had to meet the second phase of US$50 million by June 30 next year and US$75 million six months later.
In such circumstances, existing shareholders would have been diluted by Econet, which has the financial muscle.
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Nyambirai told Standardbusiness last week the offer from Econet was too good to resist as he had no financial capacity to continue recapitalising the bank.
He said by owning a minority stake in Econet, he would have a small slice of a bigger cake.
“It was a question of; do I become the minority shareholder in the bank which is being diluted or do I accept the offer. For me the choice was very simple,” he said.
“I was happy with it [the offer] to the level that they can extend the offer to minority shareholders.”
Being a shareholder of Econet has its benefits. The mobile operator was the first company to pay out dividends when the economy embraced multi-currencies in 2009.
By the nature of its business, which requires huge investments in its expansion programme, shareholders have been spared the agonies of raising fresh capital with Econet securing funding from foreign financial institutions.
Econet badly needed a bank to drive its mobile money transfer business EcoCash.
EcoCash had shown so much promise that Econet had seen it alongside broadband services, as some of the low-hanging fruits that could be harvested from its technological backbone.
Econet showed its first intentions of building the EcoCash backbone by buying 45% for US$20 million in July.
In its financial results for the six months to August, Econet reported that over 50% of its EcoCash subscribers had come through TN Bank, underlying the bank’s importance in the growth of the service.
“To drive the initiative without interference, you have to take a strategic position, a position where you influence decision-making. By taking this significant stake, we are saying we are serious about EcoCash,” Econet CEO, Douglas Mboweni said.
But there are losers too. The Zimbabwe Stock Exchange will lose its member, as TN Bank is set to delist from the bourse.
Nyambirai would lose the status associated with being chairperson of one of the top performers in terms of profitability.
Nyambirai’s loss is Econet’s gain, as the mobile operator has tapped into the knowledge of top American telecoms executive, James Patrick Myers, who will take over the reins as board chairman.
Econet founder, Strive Masiyiwa, described Myers as “a man of impeccable credentials and integrity, who will oversee the next phase of the Zimbabwean business’ development”.
Sceptics yet to be convinced In the final analysis, Nyambirai exits the limelight without fully convincing sceptics that his meteoric rise on the corporate ladder was not influenced by Masiyiwa.
Despite branding companies with his name, sceptics don’t want to give credit to Nyambirai, who rose to prominence as part of the legal team which won Econet the operating licence.
They would always see Masiyiwa pulling the strings behind the scenes.
Masiyiwa said of Nyambirai: “Tawanda Nyambirai has done an extraordinary job for us. He led the legal team that fought for the original licence in the courts. He has overseen the development of the business ever since I left Zimbabwe 12 years ago.
“He is a historical companion to me and I look forward to working even closer with him in other roles that I have for him.”
