Frontiersinsight
Zimbabwe could soon experience an avalanche of mergers and acquisitions as companies seek to recapitalize while foreign-owned firms also restructure to meet indigenisation requirements.
As companies face challenges due to the liquidity crunch, many have resorted to mergers and acquisitions.
In the first seven months of the year, the Competition and Tariff Commission approved five acquisitions.
Analysts say some of the acquisitions are aimed at vertical integration, as a way of ensuring access to raw materials – without recourse to cash, as one way of beating the liquidity challenges.
Statistics indicate that acquisitions approved during the period under review included Mr Shingi Mutasa’s FMI Zimbabwe and BP Shell and another involving Pioneer, Unifreight and Swift.
During the period, FBC Holdings acquired 49,2 percent of Eagle Insurance. Engen Zimbabwe was acquired 100 percent by Chevron Zimbabwe.
The latest deal was the acquisition of Makro by OK Zimbabwe Limited.
The deal between FMI, the majority shareholder in AIM-listed Masawara, BP and Shell Zimbabwe, encompasses the latter’s entire local assets.
The assets include 73 fuel retail sites and storage facilities with a holding capacity of approximately 59,5 million litres of petroleum products across 10 centres.
In the Pioneer deal, the ZSE-listed firm will take over the US$900 000 Unifreight debt secured on trucks, US$1,5 million for the purchase of the Swift brand over five years and US$711 000 for Unfreight’s IT systems, payable over three years.
After completing the acquisition, the transport and logistics firm will see the value of its asset base increase by US$12 million to US$30 million.
The transaction between FBC and Eagle Insurance saw the banking firm increasing its stake to 72,5 percent. FBC Bank had a 30 percent stake in the insurance firm, sharing with Zurich of South Africa.
FBC’s involvement in insurance to date has been through FBC Reinsurance. However, the acquisition of Eagle Insurance gives it a direct foothold in the industry.
As part of indigenisation, a consortium led by businessperson Moses Chingwena acquired 51 percent of Engen in a corporate finance deal, which paved the way for Engen to own 100 percent of Caltex/Chevron in Zimbabwe.
OK Zimbabwe has already started to benefit from the Makro deal with the new OK Mart contributing 8,3 percent to total group revenues of US$89 million in the first quarter of the year.
OK Mart was expected to make losses for the first three months but managed to recover in the third month and was already breaking even.
The group is expecting growth as it continues with its refurbishment exercise financed from previous fund-raising initiatives and internal resources.
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As companies face challenges due to the liquidity crunch, many have resorted to mergers and acquisitions.
In the first seven months of the year, the Competition and Tariff Commission approved five acquisitions.
Analysts say some of the acquisitions are aimed at vertical integration, as a way of ensuring access to raw materials – without recourse to cash, as one way of beating the liquidity challenges.
Statistics indicate that acquisitions approved during the period under review included Mr Shingi Mutasa’s FMI Zimbabwe and BP Shell and another involving Pioneer, Unifreight and Swift.
During the period, FBC Holdings acquired 49,2 percent of Eagle Insurance. Engen Zimbabwe was acquired 100 percent by Chevron Zimbabwe.
The latest deal was the acquisition of Makro by OK Zimbabwe Limited.
The deal between FMI, the majority shareholder in AIM-listed Masawara, BP and Shell Zimbabwe, encompasses the latter’s entire local assets.
The assets include 73 fuel retail sites and storage facilities with a holding capacity of approximately 59,5 million litres of petroleum products across 10 centres.
In the Pioneer deal, the ZSE-listed firm will take over the US$900 000 Unifreight debt secured on trucks, US$1,5 million for the purchase of the Swift brand over five years and US$711 000 for Unfreight’s IT systems, payable over three years.
After completing the acquisition, the transport and logistics firm will see the value of its asset base increase by US$12 million to US$30 million.
The transaction between FBC and Eagle Insurance saw the banking firm increasing its stake to 72,5 percent. FBC Bank had a 30 percent stake in the insurance firm, sharing with Zurich of South Africa.
FBC’s involvement in insurance to date has been through FBC Reinsurance. However, the acquisition of Eagle Insurance gives it a direct foothold in the industry.
As part of indigenisation, a consortium led by businessperson Moses Chingwena acquired 51 percent of Engen in a corporate finance deal, which paved the way for Engen to own 100 percent of Caltex/Chevron in Zimbabwe.
OK Zimbabwe has already started to benefit from the Makro deal with the new OK Mart contributing 8,3 percent to total group revenues of US$89 million in the first quarter of the year.
OK Mart was expected to make losses for the first three months but managed to recover in the third month and was already breaking even.
The group is expecting growth as it continues with its refurbishment exercise financed from previous fund-raising initiatives and internal resources.
If you want to continue reading about Zimbabwe and other frtontier countries, please subscribe
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