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Alllied Bank is likely to have a new investor by December who will pump in $30 million

Business Correspondent
A team of seasoned bankers and entrepreneurs is in the process of putting together a financial package to acquire Allied Financial Holdings and other undervalued small and medium-size enterprises through an investment vehicle known as Southern Heritage Limited.Southern Heritage Limited is to be a newly incorporated open ended investment holding vehicle domiciled in Mauritius. Its objective is to acquire, restructure and manage undervalued SMEs that focus on the financial, insurance, property and asset management industries.

Allied Financial Holdings group chairman Mr Farai Mutamangira said in an interview yesterday that due diligence was ongoing at the troubled financial institution, which has been struggling to meet its obligations.

“There still is some due diligence underway (at the bank). The structure is that we have a pool of investors coming through the Mauritian entity, which should then become a publicly quoted company,” he said.

Mr Mutamangira confirmed that the target was to wrap the transaction before December this for targeted capital of $30 million.

For Allied Bank, the financing is preferred in a blend of debt and equity and will be used to restructure operations and human capital management and re-brand the group from a marketing, sales and customer service delivery perspective.

The investors will inject fresh capital, $30 million of which will help Allied Bank to comply with the Reserve Bank of Zimbabwe capital requirements for commercial banks.

“Southern Heritage now seeks to raise an initial $30 million in debt or a blend of debt and equity to take advantage of the Holding Company’s pipeline and the investment opportunities in the SHL Investment Bloc,” the company’s investment proposal says.

“The funds will also be used to revamp the Target’s (Allied) Information & Communication Technology systems as it pertains to monitoring operations and providing customers with remote services and/or products inclusive of mobile and Internet banking, management and/or insurance solutions,” the proposal says.

The funds will also enable the founders to dilute existing majority shareholders through a new shares issue so as to comply with regulatory shareholding thresholds for individual corporate investors in the banking industry.

Allied is projected to generate an aggregated average annual internal rate of return (“IRR”) in excess of 40 percent.

“This transaction not only provides attractive return to shareholders but it also drives significant socioeconomic development in Zimbabwe by fostering financial inclusion of private citizens and small & growing enterprises through ICT products and services such as Internet and mobile banking & micro-lending solutions,” it says.

The acquisition of Allied Bank is the first in a series of other initiatives in southern Africa. The SHL founders are acquiring tangible assets that are artificially depressed and located in identified “next chapter” countries that are SADC member states.

These targets are in the banking, insurance, micro-finance, micro-lending and property & asset management industries. Some of these targets currently provide financial and/or insurance products and/or services to local governments, public institutions and private enterprises & individuals.

The founders are led by two corporate & investment bankers with access to high quality deal flow in the SHL Investment Bloc. They are supported by managers, consultants, policy advisers and industry experts with tangible professional experience in both developing and industrialised markets inclusive of next chapter countries.

The founders are also advised by an investment committee of seasoned entrepreneurs, managers and investors some of whom have direct sub-Saharan Africa operations experience.

The executive management team for the new bank includes Terence Mukupe, the current group chief executive officer of Allied Financial Holdings, the United States of America-based Emmanuel Gwatidzo, a lady from Kenya and two other Zimbabweans whose identities are still in confidence.