In 2017, a consortium of investors, Diaspora Infrastructure Development Group (DIDG) partnered South Africa’s Transnet and won the $400 million tender to recapitalise the National Railways of Zimbabwe. NewsDay (ND) reporter Mthandazo Nyoni sat with DIDG executive chairman Donovan Chimhandamba (DC), to understand why the deal has taken long to take off. Below are excerpts from the interview.
ND: What is your comment on Transport minister Joel Biggie Matiza’s statement that the deal has hit a funding snag?
DC: The term sheets are there. They were presented to government, through the minister in October last year and recently in February 2019, banks had expressed +/- $900 million, but since then, we have received more term sheets with the latest arriving a few days ago and all from market leading institutions that include ABSA, Nedbank, Standard Bank, Ecobank, TDB, IDC (South Africa) and CBZ. We are now in the process of appointing a lead arranger from among the interested institutions to convert the term sheets into binding term sheets. This is a typical process which requires certain agreements that the three parties are busy concluding. So it is incorrect to say there is no funding.
While it is important to note that the framework agreement (FA) was seen as essential by the parties, it is not a generic construct of the Zimbabwe National Procurement Act (SPB/PRAZ) and Ministry of Finance Joint Venture Act process and thus does not encumber the actual tender award to the DIDG-Transnet Consortium, it is a holding agreement which provides the “framework” within which the parties sought to work to accomplish a set of itemised activities within agreed timeframes.
In view of the activities that are still outstanding under the FA, Transnet-DIDG Consortium requested and obtained approval for the extension of the agreement for a further period of six months, which is up to August 14 2019, to enable the parties to conclude the required activities and ensure that all project agreements are in place.
ND: Why has it taken so long for the deal to be concluded?
DC: There are regulatory approvals that are required for government entities such as Transnet that they need to obtain and such processes have prescribed Acts and timelines that they actually have to follow. Large complex deals of this nature must follow due process which itself necessarily takes time. Tied into this are all the other transaction agreements we need to conclude which the legal teams are finalising.
ND: Are you optimistic that the deal would be concluded within six months extension period that have been given?
DC: We remain positive and optimistic that we will close the transaction and we are on the ground to cover the gaps.
ND: Last year, you appointed Imara Corporate Finance and EY South Africa as DIDG advisors to set up the collective investment scheme meant to allow other Zimbabweans living abroad to inject capital into the firm. How far have you gone about the scheme?
DC: Imara Capital are our advisors and are managing the deliberations with the institutional investors who are looking to take equity in DIDG. Once we close this phase, we will then look at rolling out an instrument that will crowd in more Diaspora and Zimbabweans.
ND: The consortium had plans to venture into agriculture and other sectors of the economy in Zimbabwe. Could you kindly update us on these plans?
DC: The consortium is currently focused on closing the NRZ rail transaction and post that we will then focus on the value chain that comes with the rail business.
ND: Lastly, what plans does the consortium have for Zimbabwe this year?
DC: Expect us to finalise the deal shortly and the work of reviving NRZ starts.