Allied Bank’s Mauritian deal collapses

ALLIED Bank’s recapitalisation plans are in disarray amid revelations that a Mauritian investor linked with the lender has pulled out of the deal at the eleventh hour due to irreconcilable differences.

In March this year, Allied Bank announced that a Mauritian investor was willing to inject US$30 million and a team of seasoned bankers and entrepreneurs had been put together to acquire Allied Financial Holdings and other undervalued small and medium-size enterprises through an investment vehicle known as Southern Heritage Limited.

The target was to wrap up the transaction before year-end. Information gathered by this paper reveals that Allied Bank and head of the Mauritian-based consortium Mr Terrence Mukupe parted ways on September 4, 2014.

Mr Mukupe had already been appointed Allied Financial Holdings chief executive officer even before capital was injected into the project. Sources close to the goings-on say sharp disagreements emerged after the consortium’s due diligence indicated that some of the assets perceived to belong to the bank were not registered in the bank’s name.

“Mukupe and team pulled out of the deal after disagreeing on a number of issues. As you know, they were carrying out due diligence; that’s when they discovered some irregularities.

“There are assets which are owned by the major shareholder, Trebor Khays, that were not registered in the name of the bank.

“Allied has since looked for a new financial advisor, so all is not well at the bank. No one will invest until they put their house in order,” explained the source.

Allied Financial Holdings Bank chairman Mr Farai Mutamangira confirmed the development but would not be drawn into revealing more details on the developments.

“We have since switched advisors after disagreeing on certain issues with the Terrence Mukupe-led consortium,” said Mr Mutamangira.

Mr Mukupe said a dispute over the bank’s assets had soured relations, but quickly said he could not talk to the media on the matter.

Through the deal, Southern Heritage Limited was to be a newly incorporated, open-ended investment holding vehicle domiciled in Mauritius. Its objective was to acquire, restructure and manage undervalued SMEs that focus on the financial, insurance, property and asset management industries.

Allied was hoping that the fund would enable the founders to dilute existing majority shareholders through a new shares issue so as to comply with regulatory shareholding thresholds for individual corporate investors in the banking industry. Formerly Zimbabwe Allied Banking Group (ZABG), Allied Bank’s life was extended after Dr Obert Mpofu’s firm, Trebor and Khays (Private) Limited, injected US$22,5 million in fresh capital into the business in 2012.

Before the injection, the bank was exposed with a negative capital of US$15,4 million and efforts to attract foreign investors had failed.

 

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