Strong investor interest in IDCZ subsidiaries

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Pushing towards privatisation is the Zimbabwe United Passenger Company (Zupco)

Kudzanai Sharara
There is a very strong interest from both local and foreign investors interested in acquiring Industrial Development Corporation of Zimbabwe Limited-owned companies that were put up for sale as part of Government’s decision to privatise State-owned companies, an official with the company has said.

Government announced in mid-April this year that it was looking to sell shares in 35 State-owned firms, in the latest step to revive the economy under new political leadership.
According to Finance and Economic Minister Patrick Chinamasa, privatisation would be done through engaging strategic partners and floating shares on the local stock exchange.
Chinamasa said the parastatal reform was “designed to enhance performance, improve services delivery and to bring more order, discipline and rationality to the sector as a whole.”

Following the announcement, several State-owned entities have begun to put plans into motion with the Industrial Development Corporation of Zimbabwe (IDCZ) already engaged in serious negotiations for investment, disposal or partial disposal of some of its entities.
In an emailed response to Business Weekly, IDCZ’s public relations and administration manager Derek Sibanda, said the State-owned entity is in current discussions with various prospective investors who have expressed interest to invest and or take up part of or all of its shareholding in several of its companies that have been earmarked for partial privatisation.

Firm interest in five subsidiaries
Sibanda said the companies where strong interests have been shown include, Deven Engineering, Allied Insurance ,Zimbabwe Grain Bag, Chemplex Corporation Limited, and Stone Holdings.

“There is a very strong interest from both local and foreign investors and we remain optimistic that these deals will be concluded soon,” said Sibanda.

One of South Africa’s fertiliser manufacturers, Foskor has indicated interest in taking up a significant shareholding in Chemplex Corporation, the country’s biggest fertiliser manufacturer.

According to information gathered by this publication, IDC Zimbabwe which controls 100 percent of Chemplex Corporation is looking at diluting its shareholding to around 26 percent through loan capital or equity options

There are indications that South Africa’s Industrial Development Corporation will likely fund Foskor proposed venture.

IDCZ, which was recently re-modelled to start providing development finance to the private sector and move away from acquisition of companies, is looking at weaning off some of its subsidiary as it moves towards promoting growth and industrial primarily through development finance and effective participation in the chosen investments.

According to Sibanda, the restructuring of the IDCZ portfolio will enable the Corporation to refocus and effectively deliver on its mandate of establishment and development of industries as provided in its enabling act and to also focus on its development finance role as already approved by Cabinet in its turnaround and restructuring plan.

POSB, ZUPCO put plans in motion
Another State-owned entity, POSB, has also put in motion plans for the partial privatisation of the financial institution. In an update at the company’s annual general meeting held last week, POSB chief executive officer Admore Kandlela said a technical committee to spearhead privatisation had been put in place.

“At its last sitting, the board approved the creation of a technical committee, which is going to look into the company’s partial privatisation.

“The technical committee is made up of the Reserve Bank of Zimbabwe, the Attorney-General, the Accounting-General, the Office of the President and the State Enterprises Restructuring Agency,” Kandlela.

POSB is one of the few Government- owned institution that has been able to pay a dividend to treasury.

Also pushing towards privatisation is the Zimbabwe United Passenger Company (Zupco) which recently called for expression of interest from “potential Public Private Partners or joint venture partners in its operations, which include but are not limited to urban, intercity, city rural and cross border.”

In the expression of interest those interested are required to state whether they would want to come in as joint venture, partnership or as vendor/supplier.

A push for smaller State participation in business has been growing in Zimbabwe, with Government finally admitting that state owned enterprises were a major drain to treasury. Bail out demands from these institutions have become a long term detriment of the country’s economy.

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