Strong investors may be losing out in the race to bid for Nigeria's officially certified troubled but rescued banks. Indeed, heavyweight core investors had lost out in the advertised sale of Afribank Plc., which favoured Vine Capital Partners Limited, "a company with no financial muscle," as a respondent put it last night.
Thus, spanners are being thrown in the works regarding the auction of Afribank, even as the preferred bidder —Vine Capital — advances towards the critical stage of the 'acquisition' process.
Specifically, stakeholders yesterday decried the quality of transaction that threw up the core investor in Afribank, describing it as below expectation and out of sync with standards set by the Central Bank of Nigeria (CBN).
They are irked that more serious investors, including the Standard Bank of South Africa, were dropped for what is perceived as a less-financially capable investor.
A source expressed concern over what he described as lack of transparency in the bidding process, especially as Vine Capital came as a late entrant in the bidding process.
Investigation reveals that Vine Capital Partners Limited was registered with the Corporate Affairs Commission (CAC) on July 28, 2010, a day before the expiration of the deadline for submission of bids.
Goings-over also shows that the company's share capital is a paltry N1,000,000, giving an indication that the Special Purpose Vehicle (SPV) was a hurriedly-arranged outfit to cater for specific interest in the sale of the rescued banks.
An industry expert wondered how a company with a share capital of only N1,000,000 would be able to beat eight other international and local investors to the Afribank bid.
"By the stipulation of the CAC and the CBN, share capital does not qualify for any finance company, whether microfinance or mortgage bank. An average Nigerian lawyer knows what the minimum share capital of any finance company should be," the industry expert said.
It was gathered that the managing-director designate for the new Afribank, who recently resigned his appointment with Goldman Sachs, New York, has no shares in the company.
Also, one of the directors of the company was only brought on the Board through a February 2, 2011 meeting held in Lagos.
Available records confirm that, with the exception of one Ghanaian director, whose holding amounted to N400,000, all directors, including the managing-director designate, are Nigerians.
It would be recalled that eight investors, including four South African banks — First Rand, Standard Bank Group, Old Mutual Plc and NEDBank and four local banks — Ecobank, Fidelity Bank, Skye Bank and First Bank — had shown practical interest in Afribank but lost to Vine Capital.
The CBN timetable for the sale of rescued banks identified three levels in the process for the purchase of the bailed-out banks. The first stage is the expression of interest, which was meant to terminate by November 29, 2009.
The second stage was the confirmation of interest, which was supposed to have been done by March 31, 2010; and the third stage is the final submission of bids, which ought to be completed latest July 29, 2010.
Notwithstanding the controversy surrounding the acquisition of Afribank, Vine Capital is moving into Finbank to complement its investment in Afribank.
The combined bank (Afribank and Finbank) will have $6 billion of assets and about 400 branches nationwide, making it the fifth or sixth largest bank in Nigeria by asset and deposits.
The Guardian learnt that the company has had a good meeting with the Board of Finbank but is moving "cautiously" to this end.
The transaction is expected to close by the end of April.
Source: Credible Investors Lose Bids In Rescued Banks (http://www.guardiannewsngr.com/index.php?option=com_content&view=article&id=42901:credible-investors-lose-bids-in-rescued-banks&catid=1:national&Itemid=559)