On April 23, 2013, Finance Bank Chairman Rajan Mahtani announced to the media that his bank would soon have an initial public offer (IPO) on the AIM index of the London Stock Exchange, seeking to raise a breathtaking $250 million. As more than a year has gone by with no visible progress toward this promised listing (nor has there been a listing yet on the Lusaka Stock Exchange), some observers in the British media are seeing red flags.
Writing here in the Independent, Jim Armitage notes that investors may want to exercise caution before doing business with a bank that was being investigated for money laundering and whose operational status may depend on its political connections.
Zambian bank leaves a long trail on the road to AIM
I wrote here a year or so ago about an effort by the Zambian businessman Rajan Mahtani to float shares in his Finance Bank Zambia on AIM, London’s junior market.
The piece was suggesting regulators have a decent poke around this new would-be arrival to British shores.
You see, Finance Bank Zambia was awarded to Mr Mahtani on the orders of his close ally, President Sata, after it was stripped from its previous operator, South Africa’s FirstRand Bank.
Mr Mahtani’s camp argue that it was wrongly expropriated from him and fellow investors in the first place by the previous president. FirstRand should never have been given the bank, they say.
Inevitably, the whole process has put more noses out of joint than the late, great light-heavyweight Zambian champ Lottie Mwale. Some investors say they have been left out of pocket and are less than impressed by Mr Mahtani’s recent pronouncements that he will have his bank floated in London by the end of the year.
One such Zambian dickie-bird has now dropped off on my desk documents appearing to show a US judge authorising American assistance in a Zambian criminal investigation into Mr Mahtani’s business dealings. The request for help was made by the previous Zambian government in early 2011 and eventually granted 18 months later, by which time the new Sata administration had arrived. I’m told the request was subsequently reversed and the case abandoned.
The existence of such documents should not be taken as meaning Mr Mahtani has done anything wrong, of course. Calls for comment to the bank’s Lusaka head office went unanswered, but I’m sure he would respond that any previous investigation was politically motivated. It’s true there was clearly no love lost between Mr Mahtani and the former president, Rupiah Banda.
I suppose all I’m saying is, on behalf of future investors in this bank, AIM beware. Particularly as Mr Mahtani’s 76-year-old champion, President Sata, has been in an Israel hospital recently amid speculation about his health. Who knows what would happen to Finance Bank if another government swept to power?