NMB Holdings plans to roll out its leasing unit in six months’ time, riding on the back of new investors in the group and fresh capital injection.
BY KUDZAI CHIMHANGWA
AfricInvest, FMO and Norfund recently came as NMB’s strategic partners after advancing a collective US$14,8 million through equity in exchange for 27% of the group’s shareholding.
The coming on board of the three strategic partners raised US$14,8 million to help the group’s flagship arm, NMB Bank, meet the US$50 million minimum equity capital deadline for commercial banks by June 30 this year.
Speaking on the sidelines of a share subscription signing agreement between the group and Dutch bank FMO and Tunisia based financiers AfricInvest last week, NMB chief executive officer James Mushore said the group saw much opportunity in the leasing business.
“We have a non-compete clause with African Century, so as soon as that period is over, which is in six months’ time, we will be able to roll out the leasing component. In addition to that we obviously need to raise lines of credit to be able to do leasing over a 24 to 36 month period,” said Mushore.
NMBZ disposed of its 24,79% stake in African Century Leasing to raise additional capital needed for the recapitalisation of the bank.
He said the group sees absolute opportunity in the leasing business.
Leasing relates to a financial instrument in which the property of the leased asset remains with the leasing company, while the lessee obtains the right to use the asset by paying lease rentals for the life- time of the leasing contract.
“It’s a perfect business because you are lending against a particular asset and should there be problems, you simply recover that asset,” said Mushore.
This scenario, he said, was against the background of a lack of investment in the country over a significant number of years resulting in a number of companies being left in dire need of retooling, re-equipping, and purchase of new vehicles among other needs.
“There is so much demand out there you can pick and choose your clients,” said Mushore.
The group would also leverage on the new investors on the bank’s board by opening more doors in Europe, including FMO’s wide-ranging global network of clients.
The entry of African Century into the group in 2010 was anticipated to open doors to international capital after the international financial services group underwrote the group’s capital raising measure from existing shareholders.
FMO’s mission is to promote private sector development, provide technical assistance, as well as debt to emerging economies among other objectives, as a development finance institution.
NMB is presently targeting to become a tier one bank.
Tier one capital is the core capital of the bank, which includes equity capital and disclosed reserves.
FMO senior investment officer Decio Tractenburg said up to 30% of the bank’s portfolio of investments was spread out over a number of emerging markets and Zimbabwe was increasingly contributing towards a substantial portion of that percentage.
“This is the beginning of a partnership that will be a long journey. The investment was the culmination of a decision taken three years ago to invest in Zimbabwe and to find good business opportunities. We identified NMB as a client,” he said.
Tractenburg said what attracted them to the bank was the brand, management and staff, before a finance facility was subsequently extended.
He said FMO’s contribution will be on credit lines, technical expertise through representation at board level, and availing of FMO’s global network of clients to the bank.
FMO, which is a Dutch development bank, is a triple A rated institution, meaning it has the highest possible credit rating.
Ambassador lauds partnerships
Speaking on the sidelines of a share subscription signing, Netherlands Ambassador to Zimbabwe Barbara Joziasse underscored the importance of the relationship between Zimbabwe and the European country.
She said the commitment of the Netherlands government and people towards investing in Zimbabwe was shown by companies such as FMO who have invested in the country.
“KLM recently launched its flights into the country, while Philips also brought in a delegation to negotiate a MOU [Memorandum of Understanding]. We applaud the government of Zimbabwe’s pledge to respect BIPPAs [Bilateral Investment Promotion and Protection Agreements] as a positive step forward,” said Joziasse.