The International Financial Corporation (IFC) hyped the African Banking Corporation to the international level by putting in US $ 20 million dollars (almost P 120 million) as apart of its expiation across Africa.
The bank, which has its own pent-up financial and expansion programme, said it is now more committed to the organic and regional expansion as a way of releasing growth.
“It has been a long haul in our negotiations and an investment like one by IFSC provides capacity in the region where we operate and where we want to expand into.
“I think this is a vote of confidence for us and we are very excited,” ABC chairman, Oliver Chidawo, said Friday.
The agreement is still awaiting the formal emergency general meeting scheduled for September 21, 2007 which will vote on the decision made Friday.
According to the agreement signed on Friday, the IFC will get 10 percent of the money, or P37 million shares, and the rest will be a convertible for two years or a convertible senior loan that will be translated into ordinary shares thereafter.
The loan, due for seven years with a two year convertible or either maturing to a senior loan, is expected to be used in Botswana, Mozambique and Zambia. It is going to be used for mortgages, retail banking and consumer banking as it is now forced to wear a human face.
Further, it is also expected to leverage the bank in terms of a number of issues such as enhancing its profits, building its credibility in terms of support of letter of credit and over and above improving corporate governance.
“Our single mind is into Africa and our plans are to increase mortgage, SMMEs and microfinance in Africa. And for that we need partners,” Chidawu said.
He said the Friday signing ceremony was a land-mark which aimed at enhancing the partnership, something that was equally shared by the IFCÔÇöWorld Bank investment arm’s director of financial markets, Jyrki Koskelo.
“What we are doing here is to enhance the partnership and looking forward, into mortgages and looking into countries where we go and operate.
However, according to the group CEO, Douglas Munatsi, the bank has still to grow organically before going into some foreign lands.
‘”We believe that with this signing there will come some new credit lines in the likes of ADB and IFSC, which would either think of long term debt or long dated instruments,” Munatsi said.
However, ABC is looking at different options either to come with a right option issue on a private placement or, alternatively, debt raising issue going forward. But, it is believed that the coming in of IFSC will raise confidence within ABC.