PLEASE NOTE:

MyNews24 is a user-generated section of News24.com. The stories here come from users.

 
Vuvuvu
 
Comments: 0
Article views: 404
 
 
Latest Badges:



 
View all Vuvuvu's badges.
 

Could the Atlas-Mara deal be a catalyst for Zimbabwe FDI?

11 April 2014, 07:28
The announcement of the Altas-Mara $210 million investment into ABC Holdings (ABCH) last week was an important piece of positive economic news for a business environment that has been plagued with negative headlines of late. In particular, the banks that are not part of major multinational groups have been reporting increased concern about non-performing loans and the need for more rigorous credit risk management.

The last significant foreign direct investment (FDI) announcement was the $750 million Essar deal that saw them take over ZiscoSteel and significant iron ore reserves to supply the mill. The conventional wisdom has been that further large injections would also be in the resource sector as this was export facing and also required massive amounts of capital.

Unfortunately, since the 2011 announcement of the Essar deal there has been nothing in the way of FDI mega-deals and the dearth of new capital has underpinned the sluggish growth the economy is currently undergoing.  Also, disturbingly, the Essar transaction itself has not been fully consummated yet amidst reports of haggling between the incoming investors and government over certain aspects of the deal. From the time of announcement to date, several developments which can be considered negative for attracting investment have occurred. Chief among them has been the rigorous implementation of the indigenisation policy, which has reportedly scuppered some deals which were close to being finalised. This background makes the announcement of the ABCH transaction very interesting.

ABCH is a pan-African banking group with offices across six African countries and the investment by Atlas-Mara can hardly be viewed as a pure play on Zimbabwe. Indeed, the London Stock Exchange (LSE) listed investment house has its eyes on Africa as the continent with six of the world's fastest growing economies and investment opportunities that are more attractive than emerging markets. ABCH was merely the starting point for an Africa-wide investment surge and just last week, Atlas-Mara announced that it had signed a memorandum of understanding with the government of Rwanda to buy a stake in the state-owned Development Bank of Rwanda.

It can also be argued that BancABC Zimbabwe is ABCH's biggest and most important subsidiary and therefore any investment in ABCH is a significant signal of confidence in the country as an investment destination. The principals of Atlas-Mara, Bob Diamond and Ashish Thakkar certainly expressed their excitement about Zimbabwe as an investment destination that presented attractive opportunities when they visited the country last week to talk about their partnership with Doug Munatsi on ABCH.

It's important to note that Atlas-Mara, with nothing more than a vision for banking opportunities in Africa and the reputations of its two founders managed to raise $325 million in equity capital in December 2013. Globally, there are very few investment managers that can raise hundreds of millions of dollars to fund an idea with no underlying assets apart from the passion of its promoters, especially if Africa is the investment destination. Therefore, it's a big deal if this team's very first acquisition comes with significant exposure to Zimbabwe especially considering that the majority of investors in Atlas Mara are Americans (US) who have generally given Zimbabwean investment a wide berth in the past. Investors everywhere keep tabs on what the smart money is doing, and as far as Africa is concerned, Atlas-Mara is considered the smart money.

Banking is a key sector in any economy because bankers play an important role in raising and allocating capital. In fact, in his presentation at ABCH last week, Bob Diamond emphasised that what Atlas-Mara brings to the table is capital, liquidity and technology. Given that they were able to raise hundreds of millions in equity capital, they will be able to raise billions in lines of credit and debt. It stands to reason that as a key subsidiary in the group, BancABC Zimbabwe will be one of the beneficiaries of this new money.

The Atlas-Mara network of contacts will be unleashed into the territories where they have operations to see for themselves the opportunities that Bob Diamond and Ashish Thakkar are excited about. It is conceivable that investment bankers that were put off by Zimbabwe in the past based on their desktop research and assessments of the risk/return profile will put their misgivings aside, get onto a plane and give the country a fresh look with a perspective that has been influenced by Atlas-Mara. This could prove to be game-changing.

Its early days and the ink on the Altas-Mara/ABCH deal is hardly dry. It remains to be seen how the execution will pan out and to what extent they will mobilise the capital, liquidity and technology they have intimated. In my view, it will be clear in the next twelve months whether this deal was a catalyst for significant additional FDI inflows or the first step of a pan-African investment strategy that bought ABCH in spite of Zimbabwe, not because of it.

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.
 

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining

Read more from our Users

Submitted by
JP Le Roux
The secret rise of communism in S...

Is it just me or is South Africa starting to look like a communist country? Read more...

5 comments 463 views
Submitted by
woadstress
Cut the clutter

How much of your dis-ease, unhappiness, worry, illness and other external manifestations of inner turmoil is created by your perceived need to respond to other peoples stuff? Read more...

0 comments 31 views
Submitted by
Leigh-Rose Jenkins
Licensing renewal incompetence!

I am no longer surprised at the number of unlicensed vehicles on Gauteng roads, just like I am no longer convinced that those unregistered or cloned vehicles belong to a “criminal element”. Read more...

4 comments 276 views
Submitted by
Ruan Stix Fourie
Is the invasion of our privacy re...

Someone, somewhere seems to have hacked into some private server somewhere containing photos of a few female celebrities. Read more...

6 comments 679 views
Submitted by
Atheitis
The new chicken recipe

We have had a few recipes on News24 before, mainly curries, but this is an excellent recipe for chicken that also includes the use of popcorn as a stuffing -- imagine that.  Read more...

7 comments 86 views
Submitted by
Nosipho Blue Ntombela
We are nine days away from justic...

t is simply because in this month we will know if “our” Paralympic gold medalist will be found guilty or not guilty for killing his girlfriend Reeva Steenkamp.  Read more...

15 comments 819 views

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

Camping gear!

We’ve got all your camping must have’s right here at mind blowing low prices. Check them out now!

Herbex – buy 3 & get 1 free!

Fat burn packs, appetite control chewies, stretch mark cream and more. Offer valid while stocks last. Shop now.

30% off Jinger Jack handbags

Spice up your wardrobe and save 30% on stylish Jinger Jack handbags. Offer valid while stocks last. Shop now!

Buy 3 books & pay for 2

The cheapest of the 3 books will be free. Offer valid while stocks last. T&Cs apply. Shop now!

Deal of the week!

Hisense 40” Full HD LED Television now R3999. Offer valid while stocks last. Buy now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

 

services

E-mail Alerts The latest headlines in your inbox

RSS feeds News delivered really simply.

Mobile News24 on your mobile or PDA

E-mail Newsletters You choose what you want

News24 on your iPhone Get News24 headlines on your iPhone.

SMS Alerts Get breaking news stories via SMS.

Blogs Your opinion on you, me and everyone.

Calais Website keywords automated by OpenCalais.

 
Interactive Advertising Bureau
 
© 2014 24.com. All rights reserved.
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.