ZIMPLOW Limited has reached a deal to take over the Reserve Bank of Zimbabwe’s (RBZ) entire 57 per cent interest in Tractive Power Holdings for about US$9.7 million.
Tractive Power was one of the companies put up for disposal by the RBZ as it moves to reduce its crippling debts reducing crippling debts said to total more than US$1 billion. The RBZ owed the listed Tractive Power Holdings through the Finance Trust of Zimbabwe.
Meanwhile, Zimplow, the largest manufacturer and distributor of animal-drawn farm implements in Sub-Saharan Africa, said it was seeking shareholder support to raise US$11,2 million "being the purchase consideration and associated transaction cost" for the acquisition.
In a statement the company said it was awarded the right to negotiate the purchase of Finance Trust of Zimbabwe’s shareholding in TPHL through a consortium with Transfrontier
Investments after the major shareholder took a decision to dispose its entire stake.
Zimplow’s board is of the opinion that while growth opportunities will continue to exist in its animal-drawn implements business, considerable prospects are also emerging in the tractor-drawn farming equipment segment, particularly in the domestic market.
The company’s exposure to TPHL will therefore offer an avenue for product and market diversification within the agriculture and mining sectors which are expected to be at the centre of Zimbabwe’s economic resurgence.
The TPHL investment also offers Zimplow the potential to increase revenue and reduce costs through the exploitation of regional cross-selling opportunities, enhanced economies of scale, technology and product sharing.
“Overall, therefore, this investment will potentially complement Zimplow’s strategy to be the leading agricultural and mining equipment suppliers in Zimbabwe and the Sub-Sahara region,” said Zimplow.
Zimplow shareholders believe in the short to medium term its business is poised to continue experiencing growth on the back of resurgence in the agriculture sector which is expected to grow by 11,6% in 2012.
The ministry of Finance further estimates that the mining sector is projected to grow by 15,9% in 2012 and will be the major driving force behind overall economic growth.