Dumisani Ndlela, Staff Reporter
THE Zimbabwe Stock Exchange (ZSE) has recently witnessed a number of disposals of subsidiary firms by listed entities, as directors recalibrate operations to stem losses.
Imara Asset Management Zimbabwe early this year predicted a wave of private-sector unbundling, subsidiary disposals and corporate restructurings after the domestic economy was dollarised last year.
Imara Asset Management Zimbabwe chief executive officer (CEO), John Legat said in a report to international investors and fund managers early this year that historical factors in Zimbabwe had resulted in the creation of conglomerates and wide-ranging holding company structures, but that the dollarisation of the economy would serve as a “catalyst for change”.
Imara Corporate Finance Zimbabwe is advising Innscor Africa on its current restructuring exercise.
AICO Africa Limited, a diversified conglomerate with agro as well as fast moving consumer goods businesses, said last week it had discontinued two of its smaller operations.
In an announcement accompanying results for the year to March 31, 2010, the AICO board said the group’s frozen vegetables operation, Exhort Enterprises (Pvt) Ltd will be wound down for disposal because it had now become a misfit to its global strategy.
“The group’s frozen vegetables operation has continued to perform unsatisfactorily. In particular it continues to face challenges relating to on-farm quality of contracted produce together with very low yields thereon,” the AICO statement to financial results said.
It said the board’s view was that this operation had now become “sub-scale relative to the group’s other operations and no longer fits the group’s strategy going forward”.
“Consequently, the board has decided to wind down and dispose of this operation,” said the AICO board.
The group also closed down another unit, Salamax Trading (pty) Ltd, established in 2008 as a buying office in South Africa.
The decision to close this unit was due to the fact that circumstances had changed, particularly after dollarisation of the Zimbabwean economy last year and subsequent improvement in the availability of goods and services locally.
AICO is the holding group for the Cotton Company of Zimbabwe, ZSE-listed seed firm Seed Co, and Olivine Industries established in 1931.
ZSE-listed Dairiboard Zim-babwe Ltd sold its shareholding in horticultural concern, Interfresh Ltd. The group held nearly 20 percent of Interfresh, whose other major shareholder is Old Mutual.
Delta Corporation Ltd, the largest listed group on the ZSE in terms of market capitalisation, sold its controlling shareholding in another listed horticultural concern, Ariston Holdings, to concentrate on core activities.
Both Dairiboard and Delta had acquired shareholding in the two separate horticultural groups at the height of an economic crisis in the country, with the intention of accessing foreign currency from export proceeds from the businesses.
Dairiboard had, however, been unlucky as it failed to accrue the expected benefits from its Interfresh shareholding due to lack of control.
Paper and packaging group, Hunyani Holdings Ltd, which indicated as far back as last year that it intended to dispose of non-core operations to raise cash for recapitalisation, said in a statement accompanying results for the six months to April 30, 2010 the disposal of non core assets would fund refurbishment of its businesses.
Late last year, diversified health care group, Med-Tech Holdings Limited, sold a 49 percent stake in subsidiary, Medtech Distri-bution to Titanium Marketing and Distribution, owned by a MedTech non executive director, for a cash consideration of US$100 000.
As part of the deal, Titanium was to provide skills, debt finance, and new imported product lines to MedTech, in a process to unlocking shareholder value, the directors indicated then.
The company had also indicated that it would dispose of its plastic business and was on the market for potential buyers.
The plastic business was facing serious competition from imported medical consumables and disposables, said the MedTech board.
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