ABC in $25million deal with Citigroup

Brian Benza
Staff Writer | Friday June 27, 2008 00:00

The deal, which was signed in Gaborone on Wednesday, is the first investment by CVCI in the financial sector in sub-Saharan Africa. CVCI is a international private equity investor and investment adviser in developing markets with more than forty investment professionals and offices in London, New York, Hong Kong, New Delhi, Mumbai and Tokyo. 

Under the deal, ABCH will issue a convertible loan with a two-year maturity to CVCI Africa Investments Limited, a wholly owned subsidiary of Citigroup Venture Capital International Africa Fund, a private equity fund focused on investments in Africa and advised by CVCI. Speaking at the signing ceremony, ABCH Chairman Oliver Chidawo said he was convinced the decision by CVCI to invest in Botswana is a solid one, given that the country enjoys political and economic stability.

'For ABCH this is an exciting development as we pursue our pan-African vision, and this partnership will be a major catalyst to achieve that goal.'

The new loan comes after the International Finance Corporation (IFC) late last year snapped up over 13,8 million shares in ABC after pumping in P37.4 million, taking its shareholding in the group to 10.7 percent.

The IFC has also tabled a US$13.5 million convertible loan for ABC, which, if it goes through, will taise its stake to 23.8 percent.

The CEO of CVCI, Dipak Rastogi, said his company has been watching the African markets for some time now, and they chose ABCH after being impressed by the way it has grown and what is has achieved. 'We bring a lot of experience in the financial sector, and although this is our first investment in this sector in Africa, we have other interests in Egypt and South Africa in the manufacturing sector,' he said.

Group CEO of ABC Douglas Munatsi echoed Chidawo's sentiments and said the new capital injection will give ABC the muscle to grow into a solid Pan-African bank. 'After sealing this partnership with CVCI, which is a US$7 billion financial powerhouse, we now feel we have an international quality in ourselves and for that reason, we have mooted plans to seek an international listing. 'ABCH has accrued some debt in the past years and we felt we needed to balance our capital structure through an equity deal. Today is the fruition of our efforts,' he said.  Munatsi went on to say ABCH was seeking to raise a further P1 billion to expand its footprint across East and Southern Africa and that their eyes are set on growth market such as Angola and DRC. 'This is going to mark our transition from being a boy to manhood and will give us the capacity to grow and achieve our vision. 'Plans for us to go into the retail business are also at an advanced stage as we have already upgraded our banking system. We should start recruitment of new staff in the next few weeks,' said Munatsi. As apart of the deal which is still to get shareholder and regulatory approval, CVCI is going to appoint two of its members to the ABCH board. ABC, which has its primary listing here, has subsidiaries in four other countries, namely, Zimbabwe, Zambia, Tanzania and Mozambique.