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Business Reporter
LIFESTYLE Holdings founder and group chief executive Mr Tawanda Nyambirai says his business empire will not collapse as he is working hard to realign his remaining businesses to the prevailing macro-economic conditions. The Harare businessman took great exception to negative reports that the business empire he toiled to build was crumbling, pointing out the reports are baffling as the group is simply right-sizing as everybody else is doing.

“Lifestyle is doing what everybody else should be doing in the circumstances, right sizing.
“We shall only keep those businesses where we are, or can be better than our competitors. Lifestyle shall not crumble,” he said.
Explaining the inevitable need to right-size, Mr Nyambirai said TN Harlequin Luxaire-as the largest furniture manufacturer in the country-its manufacturing and retail arms employ in excess of 1 400 people, but challenges requires to reduce its costs in order to survive the economic difficulties.

“Its manufacturing and retail arms employ in excess of 1 400 people.
“To carry this level of staff costs, the company has to generate sales in excess of US$1,8 million per month. (But) The average sales per month for 2013 were far below this figure,” Mr Nyambirai said.

Formerly known as TN Holdings Limited, the group’s business was modelled around TN Bank Limited, which has since been disposed to Econet Wireless Zimbabwe.

The demerger of TN Bank Limited (now Steward Bank) and its separate listing on the Zimbabwe Stock Exchange in July 2012 requires the Group to redefine its focus and identity.

TN Harlequin Luxaire Limited, formerly Springmaster Corporation Limited, is the largest furniture manufacturer and retailer in Zimbabwe and remains the group’s largest business on the back of which, the group has launched TN Mart, a FMCG business, and TN Grill, a quick service restaurant business (QSR).

Once each of TN Mart and TN Grill has gained critical mass, they shall be demerged leaving the furniture business operating separately from the FMCG and QSR businesses.

Lifestyle said at the group’s strategy seminar for 2013, the diversified group identified its most important investment as the TN Livestock Trust (Private) Limited.

This is a livestock banking company that has started receiving livestock deposits.
The group’s furniture business will get leather for lounge suites from TNLT, while both the FMCG and QSR businesses will get meat and related products from the TNLT.

Therefore, the furniture, FMCG and QSR businesses all have strong synergies on which the businesses can leverage.
The Group also has strong businesses in TN Medical Benefit Funds (Private) Limited, TN Healthcare (Private) Limited and TN Asset Management (Private) Limited.

“Against the background of the need to refocus, Lifestyle said it will not close TN Grill. We shall close some branches and open new ones at the same time. However, we shall open more new branches than we will close.

“Therefore, the story here is one of growth, rather than crumbling,” Mr Nyambirai said.
Regarding TN Medical, linked with a sale to Econet Wireless, Mr Nyambirai no transaction has been finalised, but confirmed the group was working on this.

“TN Medical was launched on a fund concept, something strongly aligned to banking. It’s fit in the TN Holdings Group was as a deposit mobilising strategy of TN Bank. With the disposal of TN Bank, TN Medical does not fit into the strategy of Lifestyle anymore, (hence) the reason why we would sell it,” he said.

Explaining reasons behind the disposal of TN Bank to Econet Wireless, Mr Nyambirai said contrary to reports he had fallen out with long time friend and Econet founder Strive Masiyiwa, the decision followed the realisation that the bank would not serve its purpose with a capital base of less than US$50 million.

Mr Nyambirai said he was one of the few bankers who honestly supported Dr Gono’s proposal for US$100 million minimum capital thresholds, for effective financial intermediation, even though it meant losing his pride as a shareholder of a banking institution.
“If a bank is undercapitalised in Zimbabwe, it will be under extreme pressure.

“This is what is driving the interest rates, as small banks battle to attract deposits, and at the same time, there are very few good quality companies left that can borrow money and service their obligations. This is a viscous circle, which can lead to the collapse of the whole financial system.”

As such, after meeting Mr Masiyiwa over a long business meeting, the Econet founder was initially reluctant to buy the bank, but the astute businessman later changed heart after realising that his dream to help Zimbabweans access financial services would not be realized if all strong banks were foreign owned.

Econet has since restructured the bank, now serving segment previously excluded, recapitalised and refocused it.
Mr Nyambirai says it is now the biggest by numbers and will be the largest by assets within the next 18 months.

However, he contends that although he eventually had to relinquish control in the former TN Holdings unit, the disposal to Econet had created value for shareholders.

He said Tedco Limited’s market capitalisation at the time of reverse takeover by TN Holdings Limited was US$1,8 million while that of TN Holdings Limited before the demerger of TN Bank Limited was US$29 million. TN Holdings disposed of 100 percent of TN Bank at a value of 2 654 270 Econet shares (before share split).

“For those who sold their shares immediately after the closure of the transaction, the total value of the Econet shares we got was US$14,8 million. For those who still hold their shares in Econet Wireless Zimbabwe Limited, the shares are now worth US$16,7 million.

“In the circumstances, I am confident to say that for the Tedco Limited shareholder, my team and I created US$2,4 million in value for them.

“For my employee shareholders, the value was much more,” he said.
The TN Holdings founder said that there was the possibility that the financial institution would not have survived the economic turbulence had held on to the bank, adding all the value realised would have been lost.