ABC seeks $100m

Published: 10 June 2013

DUAL listed banking group, ABC Holdings Limited, says it plans to raise a further US$100 million in 2013 to consolidate its expanding regional operation, after injecting US$50 million through a rights offer last year.

But the cash would be mobilised through debt to avoid diluting minorities, group chief executive officer, Douglas Munatsi, said last week.

The US$50 million cash call helped the group's flagship banking operation, BancABC, meet new minimum capital requirements in Zim-babwe.

But Munatsi said the financial institution required capital to support its growing business.

ABC has a primary listing on the Botswana Stock Exchange and has a secondary listing on the Zimbabwe Stock Exchange.

It reports its results in the Botswana Pula (BWP).

Munatsi said his group would be careful not to dilute existing shareholders and had opted to pursue debt financing instead of another rights offer.

"We are capital hungry," Munatsi told The Financial Gazette's Companies & Markets (C&M) following a presentation of the group's results for the full-year to December 31, 2012 on Wednesday last week.

"Debt is our option, we want to avoid a situation where were dilute our shareholders. We are making progress," he said.

In 2012 ABC, which has a footprint in Botswana, Mozambique, Tanzania, Zimbabwe and Zambia, successfully concluded a US$50 million rights issue.

Proceeds from the cash call were deployed to strengthen the group's balance sheet ahead of projected growth in business. Profit before tax doubled to BWP212 million during the review period,, from BWP108 million in 2011.

Attributable profits climbed by 60 percent to BWP133 million, from BWP83 million during the prior comparative period in 2011.

Basic earnings per share moved to 72,1 thebe during the review period, from 56,6 thebe in 2011.

ABC reported significant growth in all the markets but faced problems in Tanzania. A long standing government-backed debt has not been serviced for about two years and efforts to get settlement have hit a brick wall.

The group is undecided about whether to pull out or stay put.

"Tanzania is in a state that is brutally unacceptable but we have not reached a point of no return," said chief financial officer, Beki Moyo.

"If we start on a clean slate and there is no improvement, then we start looking at other options but we are not at a stage of no return as an executive," he said.

BancABC Tanzania registered a decline in net interest income and increased impartment, during the period. Impairments rose by 17 percent to BWP38 million in 2012, from BWP33 million in 2011. BancABC Mozambique grew income by 17 percent but a rise in expansion related overheads hit attributable profits which ended the review period 39 percent down at BWP18 million.

Munatsi told C&M that his group had started revitalizing its operations in that market following the emergence of competition from Portu-guese investors.

Portuguese investors running away from a blazing crisis in the troubled Eurozone have turned to their former colony for respite, injecting as high as US$70 million in existing banks, or new projects.

"In Mozambique, Portuguese banks are coming in," said Munatsi.

"They are running away from what is happening back home. It is a market that we are seeing heightened competition, so we have to jerk up our operations because there are competitive pressures," he added.

- fingaz

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