Restoring confidence in Afre crucial

US$6,4 million, restoring confidence in the group is of a paramount importance.
In the process of rebuilding the company, sprucing up the balance sheet and increasing returns to shareholders it seems not everyone is happy with the process and the decisions being made by the new team at Afre.

During the company’s analysts and media briefing the idea behind the proposed US$15 million rights issue and conspiracy theories surrounding the underwriters of the rights offer were questioned.
Some thought the rights issue was meant to dilute existing shareholders, but it has been debated that it gives the company more value as the rights issue share price would be higher than the current trading price.
However, in trying to balance between shareholders and policyholders, Afre was found wanting. Some minority shareholders felt shortchanged and felt the initiative was to the benefit of some major shareholders.

This, resulted in the Zimbabwe Stock Exchange raising the red flag on the shareholders meeting. However, it seems the parties managed to negotiate with the authorities with latest information indicating the meeting will go ahead and start the rights issue process.
Given the time the ZSE wrote to the chairman, Mr Tawanda Nyambirai notifying him of the concerns raised by the regulator following a forensic audit by BCA Forensic Audit Services, one doubts if the grey areas have already been addressed.

It is important for shareholders to put minorities in the picture and ultimately the policyholders who would have invested their money over a period of time.
If it means the deal is suspicious, regulatory authorities should scrutinise it and come up with a win-win situation.
Could it be Timba pushing from outside, trying to regain his territory?

Or is it that Econet wants to increase its stake in Afre – as chairman Tawanda Nyambirai is also the chairman for Econet?
TN owned by Nyambirai is said to be the underwriter of the rights issue, is it ok?
All these issues fall under good corporate governance, which has been queried at Afre, according to the concerns of the regulating authorities.

This has made some sections within and outside Afre think that the company was being run in the interest of RFHL and Econet in view of the return agreement between the two parties.
It is feared that this interest could compromise the interests of other stakeholders, particularly policyholders and pension fund members.

It is also alleged that some board members are clandestinely seeking re-election to continue overseeing the operations of the group. Afre has actually moved with speed to rectify the damages but they should be cognisant that efforts to sort things out could create more problems.

It is of public knowledge that Afre is also being investigated by the Insurance and Pension Commission on the operations of its subsidiaries and it would be in bad taste for them to go ahead with the rights issues if these investigations are yet to be brought to finality.

All concerned parties should be satisfied, it is not for the majority shareholders to do as they please or what they think is good for minorities and policyholders.
Afre needs money for recapitalisation as soon as possible but things should be done above board. However, there is a need to clarify on the possible conflict of interest that may exist especially if TN Bank is

underwriting the rights issue. Nyambirai is the group chief executive for TN Holdings, chairman of Econet Wireless and chairman again for Afre.
Only time will tell. The market is waiting to see what will happen to this transaction. It has to take place because the company needs fresh capital.

What is more likely to happen is that some would be shown the doors while other go up the ladder. The biggest concern that regulators should fight for is the future of innocent policyholders, pension fund members and minority shareholders.