FBC pays US$34m deposit for StanChart

FBC Holdings Limited (FBCH) which is set to acquire 100 percent of Standard Chartered Bank PLC has made a US$34 million deposit into Standard Chartered Bank UK account to demonstrate its capacity to execute the proposed transaction.

An escrow account was set up in which FBCH, through FBC Bank Limited deposited the amount.
The Escrow Amount was based on the indicative net asset value using a proforma Completion Balance Sheet computed as at 31 March 2023.

In April last year, Standard Chartered PLC announced its decision to divest from a number of markets including Zimbabwe.

Consequently, Standard Chartered Bank Zimbabwe Limited was put up for sale.

It is against this background and in line with FBCH’s strategy of continuously growing the business organically and through mergers and acquisitions if opportunities arise that FBCH board in a meeting held in June 2022 resolved to submit a bid for the acquisition of SCBZ.

A rigorous bidding process ensued culminating in the Group’s binding offer being accepted by the shareholders of SCBZ and the subsequent execution of the sale and purchase agreement.

In an abridged circular to shareholder, FBC said, “To demonstrate FBCH’s capacity to execute the Proposed Transaction, an escrow account was set up in which FBCH, through FBC Bank Limited (“FBCB”) deposited a sum of Thirty-Four million United States Dollars (“USD”) (US$34,000,000) (“the Escrow Amount”) with Standard Chartered Bank UK (“SCB” or “the Escrow Agent”).

“The Escrow Amount was based on the indicative NAV using a proforma Completion Balance Sheet computed as at 31 March 2023.”

In June, the two financial institutions entered into an agreement for 100 percent acquisition subject to regulatory approval.

As part of the agreement, FBCH will also acquire the economic interest in Africa Enterprise Network Trust whose main asset is a 20,7 percent shareholding in Mashonaland Holdings Limited. (MHL).

The circular states that following the planned transaction FBCH would continue to employ all of its local employees and the two institutions will work closely to provide a seamless transition for its clients and staff.

Under the proposed transaction, FBCH shall not retain the SCBZ name.

Africa Enterprise Network Trust is a stand-alone fund created by the SCBZ shareholders to house any other local investments other than the investment in SCBZ.

The shareholders are the current holders of the beneficial and economic interest in the Trust.
AENT’s main assets are 20,68 percent equity interest in Mashonaland Holdings Limited and legacy debt receivable with a face value of US$8 million from the Ministry of Finance and Economic Development

The circular states that the benefits of the proposed transaction include the creation of a larger, diversified banking portfolio with a combined asset base, customer base and geographical reach that is more resilient and competitive in the face of industry wide challenges such as regulatory compliance and digitisation.

Benefits also include leveraging the two banking entities’ respective strengths, capabilities and competences to create dynamic banking operations allowing the merged entity to enhance its loan underwriting capacity and enabling the Group to serve a broader range of customers across different market segments.

Added to that, it enables the Group to achieve economies of scale and operational efficiencies by consolidating back-office operations, systems and resources, reducing duplication, and enhancing productivity and profitability.

In addition to the 20,68 percent shareholding in MHL, SCBZ comes with an impressive portfolio of investment properties that will augment FBCH’s own vibrant portfolio.-chronicle