Premier Finance Group (Zimbabwe): Banking In The Time of Cholera Harvard Case Solution & Analysis

 IMD-1-0292 © 2010
Leleux, Benoit F.; Hegarty, Aoife

January 2010. George Nheweyembwa could only picture what foreign investors were thinking about ADC’s acquisition of a bank with enormous overheads and no earnings in Zimbabwe. He remembered back to when he joined ADC 18 months previously; the firm was just a novel German-funded private equity investment fund with a focus in particular Rwanda; on frontier markets; Equatorial Guinea and Zimbabwe. After numerous stints abroad; the ADC standing got him closer than ever to his native Zimbabwe. He expected to make good on his promise to lead to his fellow countrymen’s well being, regardless of the serious challenges that lay ahead. The close of ADC’s Premier Finance deal a few weeks ago was a litmus test for ADC, but also a landmark for Zimbabwe and its fiscal business. Raised capital requirements on financial institutions; erratic economic policies; and an incredible sequence of events; including conflicting stockholders had led the firm to the deal in which it finally

Got a sizeable position. But closing the deal had been the easy part. Recent press reports had accused the Central Bank governor of improper conduct in his acceptance of ADC’s waiver of the Indigenization and Economic Empowerment Act; which limited ownership to 49% by foreign investors. Would this PR that is unwanted affect ADC’s attempts to turn around Prime Minister? The Government of National Unity (GNU) was again demonstrating how disingenuous its name really was; with potentially catastrophic effects. On the positive side; the powerful dollarization of the nation in late 2009 had brought some stability to the market.

The management team of Premier Finance could implement the company’s increase strategy and was now in full control. But how much further should ADC intervene? The future of ADC’s strategy in the region hung in the balance. Learning objectives: Zimbabwe as an investment destination. Chances created by years

Of mismanagement and hyperinflation. The challenges of identifying a particular chance and onducting a suitable due diligence in a country where financial statements are blurred by years of inflation; irrational and inconsistent policies along with a surprising de facto dollarization (or multi-money regime). Dealing with customs and the remnants of years of corruption and politics of violence and bullying. Structuring deals to try to control various levels of threat; from sovereign risk to private credit risk

Building a fresh strategy for a financial institution; moving merchant/investment banking; including the need to completely revamp its skills it establish. 

Premier Finance Group (Zimbabwe) Banking In The Time of Cholera Case Study Solution

Subjects: Africa; Private equity; Doing business in Africa; Zimbabwe; Buyouts; Development finance; Banking in Africa; Sustainability; Deal structuring; Negotiation; Brand building; Investment banking; Sub-Saharan business; Corruption; Hyperinflation
Settings: Zimbabwe; Sub-Saharan Africa Banking; Private 2007-2010

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