ABC Holdings mulls US$50m rights issue

regulatory minimum capital levels in Zambia.
The company’s directors are evaluating options to address the issue.

ABC Holdings operates in Botswana, Zimbabwe, Mozambique, Zambia and Tanzania, where its operations have been growing rapidly.
In a statement, group chairman Mr Howard Buttery and chief executive officer Mr Doug Munetsi said further expansion required fresh capital injection.
Mr Buttery and Mr Munetsi said the bank’s 23,2 percent shareholder, African Development Corporation, had agreed to underwrite the cash call.
“The balance sheet of the group has significantly increased over the last couple of years,” they said. “As a result, it would not be possible to grow further without additional capital injection.”

They said BancABC Botswana, Zimbabwe and Tanzania had grown to a stage where capital adequacy levels were close to regulatory minimums.
But BancABC Mozambique clients have reportedly grown faster than the bank’s capacity to service                   them.
The company expanded its product range by introducing retail banking in 2008, which has increased its funding needs.

ABC said the growth in the Mozambican operations had been funded from the group’s internally generated resources and the business was showing huge potential for profitability this year.
“However, it is capital, systems and labour intensive,” ABC said. “In view of this, the board has recommended that US$50 million be raised immediately by way of a rights issue in order to ensure that the group does not lose the momentum created.”

The group seeks to grow its balance sheet and sustain profitability recorded across all markets last year, except Tanzania.
Group profit attributable to shareholders stood at 83 million pula for the full year ended December 31 2011. ABC Holdings is headquartered in Botswana and uses the pula as its financial reporting currency.

Zimbabwe contributed the most to the attributable profits, weighing in with 39 percent, followed by Zambia at 23 percent, Botswana and Mozambique each with 20 percent and Tanzania weighing down with minus 2 percent on the back of a 17 million pula loss.
Zimbabwe operations registered a 106 percent increase in attributable profit to 55 million pula in the period under review.

Interest income and non-interest income rose 137 percent to 136 million pula and 51 percent to 129 million pula, respectively.