Three suitors eye WMI stake

Source: Three suitors eye WMI stake | Sunday Mail (Business)

Business Reporter

At least three local suitors (names supplied) have submitted bids to acquire the Industrial Development Corporation of Zimbabwe (IDCZ)’s 74 percent shareholding in car assembler Willowvale Motor Industries (WMI).

Sources with knowledge of the matter told The Sunday Mail Business that a leading car dealer, a funeral assurance company and a local tobacco processor are among companies that have submitted bids for the stake.

IDCZ general manager Mr Ben Kumalo said the company was working with its parent ministry (Industry and Commerce) and the State Enterprises Restructuring Agency (SERA) to evaluate the expressions of interest by the potential suitors.

“The EOIs (expression of interests) have been evaluated and shortlisted,” said Mr Kumalo in an e-mailed response.

“In the case of WMI, the IDCZ now awaits guidance from Government on how to proceed with regards to the shortlisted EOIs.”

The disposal of WMI is in ACD with the Aciate companies under the State Enterprises and Parastatal Reform Framework aimed at injecting fresh capital and re-jigging management.

ACStill, IDCZ, a State-owned entity, will continue engaging several other Original Equipment Manufacturers (OEMs) for the local production of their brands while at the same time pursuing disposal of its majority stake in Willowvale.

However, negotiations with OEMs have been affected by weak demand for new cars and foreign currency shortages.

Analysts say given low disposable incomes, demand for new vehicles would remain a challenge in the short to medium term.

Between 2009 and 2016 (when the US dollar was predominantly a reference currency), Zimbabweans spent as much as US$4,5 billion on second-hand cars, which translates to an average of US$566 million per year, according to Zimbabwe NatioAnal Statistics Agency (Zimstat).

At its peak, WMI was producing 18 000 vehicles per year before production plunged.

Some of the brands which WMI assembled include Madza, Nissan, Mitsubishi and Toyota.

Pre-owned vehicles are fuel inefficient and haemorrhage resources through frequent breakdowns.

Zimbabwe has been facing foreign currency shortages owing to both low exports and foreign direct investments.

Mr Kumalo said WMI will require enough foreign currency to import semi-knocked-down (SKD) kits.

In 2017, the company entered into a joint venture with a Chinese firm to assemble cars from SKD kits.

The partnership resulted in the formation of Beiqi Zimbabwe, a joint venture between Beijing Automobile International Corporation — China’s fifth-largest car maker — and WMI.

However, very few units have been assembled at WMI as it emerged those who ordered the vehicles actually received new cars imported from Chinese plants through local car leaders.

In 2018, the Government launched the Motor Industry Policy, which seeks to attract foreign direct investment into the local vehicle industry by 2030.

By that time, Zimbabwe is hoping to have achieved upper middle-income status.

The policy encourages Government departments to buy local vehicles.

The IDCZ has also short-listed two local firms interested in buying shareholding in Deven Engineering — a local assembler of trucks and buses.

Faramatsi, an investment vehicle linked to Doves Funeral Assurance and Glenwood Investments, has been selected to acquire IDCZ’s 74 shareholding in Deven.

Deven’s core competence is trucks and bus body manufacturing done on rolling chassis or from knocked-down kits.

It can build trailers, tankers and specialised vehicle bodies such as compactors, dumpers, tippers, refuse trucks and repairs.

Faramatsi is also reported to be the investor that acquired IDCZ’s 18 percent shareholding in Amtec Motors.

So far, IDCZ has disposed of its 51 percent shareholding in Almin Metal Industries, 49 percent interest in Stone Holdings, while Zimbabwe Copper Industries was liquidated.

Potential investors for Zimglass, which is under liquidation; Irazim Textiles; and Travan Blankets have been identified.

IDCZ also received bids for Chemplex Holdings, which requires between US$70 and US$100 million for recapitalisation.

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