Capricorn Group is set to directly disinvest from Zambia, after the banking group announced that it had concluded a purchase agreement with Access Bank Plc for its entire interest in Cavmont Capital Holdings Zambia PLC.
Under the terms of the agreement which is still subject to regulatory approval, Access Bank Zambia will acquire the entire issued ordinary share capital, assets and liabilities of Cavmont Bank, and on completion, Cavmont Bank will become part of Access Bank Zambia and operate under the Access Bank brand. Capricorn on the other hand will hold preference shares in the enlarged Access Zambia for a period of five years, after which the preference shares will be acquired by Access Bank Plc for a maximum purchase amount of N$288 million.
When quizzed on the transaction and if the banking grouping was using it as an exit strategy from its troubled Zambia investment, Capricorn Group Executive Officer: Brand & Corporate Affairs, Marlize Horn said the group will still retain an indirect interest in the business for the next five years.
“For the next five years we will be indirectly involved in the business and have confidence in the merged bank that will come from the merger of Cavmont and Access Zambia,” she said, however, adding that Capricorn will be looking at delisting Cavmont Capital Holdings from the Lusaka Stock Exchange.
“We looked at a number of options, but ultimately we believe that the transaction is the best solution for all stakeholders. This also supports the capital requirements of the Bank of Zambia for foreign owned banks. Although it was not the strategic intent to exit Zambia, only one party can take the lead as shareholder of reference and with Access Bank being the larger group, this was the best option.”
On whether the bank will suspend its regional expansion when it concludes the Cavmont deal, Horn said, “We are always looking at opportunities and now we have an opportunity to support our business in Botswana more and we want to be seen as a regional group.”
On the future of the bank’s leadership including Managing Director, Peet van der Walt, Horn said, “the basis of previous mergers has been to build on the existing talent of both entities and therefore modeled to absorb all staff. With regards to the MD, he will be leading the integration from the Capricorn side. It is too early to discuss management and structure changes. Ultimately, we are focused on growing the business in Zambia and we will ensure we have the right people in place to do that.”
The announcement by Capricorn comes as Cavmont Bank a loss after tax of N$19.8 million last year, a reduction from a loss after tax of N$46.6 million in 2018.