The Competition Authority is set to decide on the proposed takeover of the pan-African banking Group, African Banking Corporation (ABCH), which trades as BancABC, by the London Stock Exchange listed firm, Atlas Mara Co-Nvest Limited.
According to section 57(3), of the Competition Act, any person, including a third party not party to the proposed merger, may voluntarily submit to the inspector or the Authority any document, affidavit, statement or other relevant information in respect of a proposed merger. As a result, the Competition Authority this week indicated that it is seeking stakeholder views for or against the proposed merger, which may be sent within 10 days from the date of publication. The proposed transaction involves Atlas Mara acquiring 100 percent shares in ABCH which trades in five southern African countries including Botswana.
On the other hand, Atlas Mara is a recently incorporated British Virgin Islands company which is listed on the London Stock Exchange. Its major shareholders are Guggenheim Partners Asset Management LLC and Wellington. Preliminary findings have since shown that none of Atlas Mara’s shareholders have any business interests in Botswana, such that Atlas Mara has no operations or investments in Botswana.
A breakdown of the Botswana Stock Exchange listed outfit’s financials for the period that ended December 2013 by respective subsidiaries shows that BancABC Botswana’s net profit after tax reached P153 million, reflecting a 62 percent growth (2012: BWP 94 million). The upward trend has been attributed to an increase in net interest income as a result of higher margins recorded in consumer loans, which were of a significantly higher average level despite the fact that the total loan book only grew by 10 percent year-on-year. Group Chief Executive, Douglas Munatsi admitted earlier this year that BancABC Tanzania continues to be a major challenge for the Group as two subsidiaries in that market recorded impairments of P135 million for the year under review. As a result both operations recorded substantial losses for the period under review.
“An aggressive approach has been taken on impairments and recoveries will only be accounted for on receipt of cash. It is anticipated that it will take between 12 and 24 months to achieve the desired turnaround,” Munatsi said.
However another star performer is BancABC Zambia which posted attributable profits of P50 million which is 39 percent up on P36 million recorded in 2012. It is said that business volumes in consumer loans as well as nonÔÇôfunded transactions were the major drivers of this performance. Meanwhile BancABC Zimbabwe’s attributable profits stood at P118 million from the P103 million recorded in 2012, despite profitability being adversely affected by high impairments, which increased to P92 million compared to P41 million in 2012. The impairments were a direct result of the liquidity situation in the country.