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Business Reporter
ABC HOLDINGS’ board has appointed a sub-committee of independent directors to oversee evaluation of the business in order to appropriately advise minority shareholders on whether to sell or retain their shareholding.There are currently huge differences in the ABC Holdings family between Frankfurt Stock Exchange- listed majority shareholder ADC and minorities over the share price that the former has offered to buy out minorities.
ADC is required in terms of the Botswana Stock Exchange rules, where ABC Holdings has its primary listing, to make a mandatory offer to buy out minorities after increasing its stake from 23 percent to over 50 percent.
But differences have emerged between shareholders over the US60c per share ADC has offered minorities after raising its stake when it underwrote ABC Holdings’ US$50 million rights issue last year. The minorities consider the offer too low.
ABC Holdings group chief executive Mr Douglas Munatsi said in an interview last week that the group would engage independent financial advisors to determine the value of the business in order to guide minority shareholders.
“The board has appointed a sub-committee of independent directors who are actually overseeing that whole process so we will go to a party such as Deloittes, KPMG, Imara or ourselves because that is what we do in our investment business.
“When that party gives an opinion to say ‘we think the price is X’, the independent committee of the board is going to advise the whole board.
“We are not independent, we are not allowed in that sub-committee, there are also some shareholders who are not independent.
“As a group or as a board we will then be advised to say this is what the advisors are saying, and this is what they recommend, that is what we will then take and make a decision. As a board we will then advise shareholders to say US60c is too low or too high and recommend that they sell or not,” Mr Munatsi said.
The ABC Holdings CEO was explaining measures employed to ensure minorities are fully informed on whether to accept the ADC offer or choose to retain their shareholding.
Mr Munatsi said minorities were not being forced to sell, but ADC was compelled to make the mandatory offer in terms of the mergers and acquisitions rules of the Botswana Stock Exchange when a shareholder raises its stake above 34,99 percent.
While ABC’s share reached a high of US97c on the Zimbabwe Stock Exchange after continuously posting good results since dollarisation, the price has since fallen to around US57c.
Asked why the share has not kept creeping up, Mr Munatsi said it was because of generally negative sentiment against financial stocks, which was characteristic of all banks in the economy.
Minority shareholders will then choose either to sell or retain their shareholding in the group depending on how they value the business.
ABC announced a phenomenal set of results for the half-year ended June 30, 2013 with the pan-African banking group’s profitability largely driven by the substantial growth in retail banking.
Group pre-tax profits grew to BWP169 million, 77 percent up on the BWP96 million achieved in the prior year comparative period.
Attributable profit of BWP143 million was 157 percent higher than BWP56 million achieved in the same comparative period in 2012.
Total income for the period increased by 47 percent to Botswana pula 701 million from BWP476 million with growth being recorded in all major income lines of the group’s operations.
The retail banking business provided the major impetus for the results. The vastly improved performance was essentially driven and bolstered by Banc-ABC Botswana, BancABC Zambia and BancABC Zimbabwe, which achieved critical mass in retail banking and hence the three operations posted good results.
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