Brainworks in  $35m capital raise

Happiness Zengeni Business Editor
Local investment holding firm Brainworks Capital Management has successfully raised $35 million following the closure of a capital raise last week.

The proceeds will be used to strengthen various company investments, which include Dawn Properties and African Sun, and to pursue investment into the telecoms sector in spite of the withdrawal of the offer to purchase a stake in Telecel Zimbabwe.

The rights offer was underwritten by major foreign shareholders Red Rock Capital and Blue Air Capital. The offer opened on March 2 and closed on March 23.


According to the company’s circular on the capitalisation exercise, Brainworks will seek to obtain control of African Sun by making an additional purchase of shares and effectively hold more than 51 percent of the issued share capital.

The acquisition will cost approximately $3,5 million.

About $7,4 million will be used to buy out minorities in Lengrah Investments, the special purpose vehicle holding shares in African Sun and Dawn Properties including Stewart Cranswick.

The purchase of the shares will be completed on May 31, 2015. Lengrah Investments holds about 43 percent in Dawn and a similar stake in African Sun.

Brainworks is required by Zimbabwe Stock Exchange rules to make an offer to minorities in the companies as they have exceeded the mandatory 35 percent shareholding.

They will also use the proceeds to have a rights offer in African Sun in order to clean up its balance sheet.

Brainworks was also recently granted a licence to operate a life assurance company, which needs to be capitalised with equity of $1 million.

“The other $1 million will be injected by a technical partner who has been secured, to meet the regulatory requirements of $2 million capital.”

Chief executive Mr George Manyere told The Herald Business that even though they had withdrawn the offer to purchase the 40 percent stake in Telecel Zimbabwe, the company was still looking at entering the lucrative sector.

“We believe the telecoms sector provides an opportunity for long-term growth and strong cash flows.

“In spite of Brainworks withdrawing its offer to acquire the shareholding in Telecel, we are still looking at entering into the telecoms sector either on the mobile, fibre or infrastructure side. There is value in the telecoms space.”

The investment holding company last week withdrew its offer to acquire Empowerment Corporation’s stake in Telecel after protracted shareholder wrangles had stalled the transaction.

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