IDC spins off WMI, Deven 

Source: IDC spins off WMI, Deven | The Herald May 13, 2019

IDC spins off WMI, DevenProf Ncube

Golden Sibanda Senior Business Reporter
State-controlled Industrial Development Corporation (IDC) has started the process to dispose of its controlling shareholding in struggling automobile firms, Willovale Motor Industries (WMI) and Deven Engineering, as Government’s parastatal and State enterprises reform gathers pace.

Finance and Economic Development Minister Mthuli Ncube said last year that privatisation of struggling State entities and parastatals will entail listing on the Zimbabwe Stock Exchange (ZSE) and forming joint ventures.

Restructuring of State enterprises and parastatals is an integral element of extensive reforms envisaged under Government’s two-year economic blue-print, Transitional Stabilisation Programme (TSP) (2018-2020).

Minister Ncube said last year that the Government spent half a billion dollars supporting struggling SOEs and parastatals in 2018 and 2017, as the loss-making entities continued to drain limited public funds.

Restructuring of parastatals and State entities also comes after it emerged that a total of 38 out of 93 State-owned enterprises (SOEs) audited in 2017 incurred a combined loss of $270 million, as weak corporate governance practices and ineffective control mechanisms took their toll.

State Enterprise Restructuring Agency (Sera) chief executive Edgar Nyoni told The Herald Business last week that the process IDC had initiated to relinquish its shareholding in WMI and Deven was in sync with Government policy to divest from some entities.

As such, IDC which owns 91 percent of WMI and 100 percent of Deven, said last week it was working with Sera in its quest to find suitors for its shares in WMI and Deven.

“It is part of the programme as espoused by the Government in terms of IDC divesting from some of its subsidiaries and allowing others to come in with (fresh) capital to support operations,” Mr Nyoni said in an interview.

Deven is currently struggling and not in production due to acute forex shortages and is only focusing on initiatives such as refurbishments just to keep going.

WMI resumed operations in March 2017, after succumbing to a funding forced 5-year hiatus, following a joint venture with a Chinese firm to assemble locally a new range of pick-up trucks from semi-knocked down kits.

Mr Nyoni said WMI and Deven were among the first batch of companies within the expansive IDC empire, which includes other entities such as Chemplex Corporation, also being privatised.

IDC sells completely built up vehicles (Mazda and Mahindra) and is also currently contract assembling BAIC pickup trucks from semi-knocked down kits. Deven’s key competence is truck and bus body manufacturing.

WMI’s fortunes suffered after the turn of the millennium following the down turn in economic fortunes with demand for its cars plummeting while capacity to produce took a heavy knock due to financial stress.

IDC issued a statement last week inviting suitors to dilute its interest up to 74 percent in each of the automobile assemblers, as it seeks to exit the companies to allow new investors to come in and inject requisite fresh capital.

Most companies within the sprawling IDC empire have been operating way below capacity due to acute funding limitations, causing the companies to run up perennial losses and depend on Treasury for handouts.

Mr Nyoni said IDC was now at an advanced stage of negotiating with potential investors and these included fertiliser and chemicals manufacturer, Chemplex Corporation.

He said they were working with various transaction advisors in the process to privatise the Government-owned entities and some parastatals after which identified suitors would perform due diligences.

In line with Government’s privatisation policy, a number of firms have since made calls for expressions of interest either by transaction advisors or prospective investors. The entities include Chemplex Corporation, IDC Group, Infrastructural Development Bank of Zimbabwe, TelOne and Agriculture Development Bank (Agribank) among others.

Other State entities that have already started on the process to privatise wholly or partially are petroleum products retailer Petrotrade, Zimbabwe United Passenger Company (ZUPCO), People’s Own Savings Bank (POSB) and postal and courier services provider Zimpost.

Government intends to restructure 41 State-owned enterprises, as it ups efforts to wean them from the fiscus and make them commercially viable.

Of these, 13 will be privatised while 12 will be listed on the ZSE. Other entities will be departmentalised, partially privatised, commercialised or liquidated.