I was born and raised in Harare to a Zambian migrant father and Zimbabwean mother. I completed a Bachelor of Business Studies Honours degree at The University of Zimbabwe and got into banking by accident. A friend, Raymond Ndlovu, worked in the Project Finance division of Standard Chartered Merchant Bank (SCMB) he put my name forward as a trainee in corporate finance where I spent four years. In 1990 when Nelson Mandela was released, South Africa began to look quite attractive to me.
Zimbabwe was a small economy with only about 60 listed entities and I had already interacted with most of the prominent ones.
I therefore felt that it was time to move on and joined Standard Bank's corporate finance division in Johannesburg in December 1992.
Around 1993, the first Black Economic Empowerment (BEE) deals began to happen. Amongst these was the formation and listing of New Africa Investments Limited (NAIL). Based on the work we did for them Nail in May 1995 approached a few members of Standard Bank's corporate finance team with the idea of forming an investment bank for the new dispensation. This gave birth to Pleiade Investment Corporation (Pleaide). The company had a mere seven million rand start-up capital making it an incredibly risky move for me. My family and friends were concerned that I was making a mistake leaving a stable bank for an unknown entity. But I was 28 and viewed it as an entrepreneurial opportunity. It would be great if it worked and if didn't, I would have at least learnt some valuable lessons in life.
One of our first deals was acting as transaction advisors when an American company Southwestern Bell Corporation (SBC) decided to invest in MTN. Soon after the conclusion of the SBC transaction, we made contact with an American investment bank called Donaldson Lufkin & Jenrette (DLJ) who were interested in investing in South Africa, and following extensive negotiations, DLJ acquired a 51% stake in the business which was thereafter renamed DLJ Pleiade. Things were going swimmingly and in 1994, when African Bank went into curatorship, NAIL and AMB were involved in rescuing it. As part of the process, African Bank acquired a stake in our company this giving us additional capital.
With that capital injection, we now had more than the R50 million in primary capital that was required to obtain a banking licence which we acquired towards the end of 1996. After obtaining our banking license we became known as DLJ African Merchant Bank and in 1997 our trajectory continued as we listed AMB Holdings on the Johannesburg Stock Exchange (JSE). We grew very quickly boasting a staff complement of about 150 at our peak in 1998. AMB was the place to be, we worked hard and played hard. I recall one occasion when after a particularly successful year, we took some members of staff and their partners on a cruise off the east coast of SA.
In 1998 there was a bull run in the financial services companies listed on the JSE and in one week AMB had a market value of a billion dollars. We had listed at R8 a share and in mid-1998 we were trading at R83 per share. Fortunately for shareholders, there were lock in provisions that ensure that management could not cash in their shares. A year later in 1999, we did a rights offer at R30 per share and listed AMB Private Equity Partners which resulted in additional capital for our private equity investment activities. We had quickly moved from a simple advisory firm to a fully fledged investment bank involved in corporate finance, treasury and trading, private equity and structured finance.
One downside of being a listed company was that the remuneration of directors was published and as such people in Zimbabwe would regularly view my total remuneration to establish whether or not I was having a good year. I had to contend with such questions as: "What's it like being worth X million rand?"
In 2000, things started to go pear-shaped. We had a squabble with NAIL our controlling shareholder which precipitated a decision by NAIL to unbundle their shares. From having one strong solid shareholder with good BEE credentials, we suddenly had a shareholder base of about 20,000. Then there was a banking crisis when a number of banks went under. Consequently, our banking licence was not making us money and we eventually handed it back to the Reserve Bank in 2001. This was followed by staff cuts as we adopted a model that was limited to corporate finance, private equity and hedge funds. We also opened an operation in Ireland which we retain to date with a country manager and a few staff. A change in the leadership in 2002 saw the founding CEO Rob Dow step down for the current CEO, Andrew Sprague. There was poor market sentiment in our share price going below the original listing price. At one point in time, our net asset value was higher than our share price which precipitated discussions on the merits of delisting from the JSE.
In 2003 Allan Gray controlled a 30% stake in the company (on behalf of its clients) and rumours began floating that a hostile takeover was imminent. We called on an old friend at Investec South Africa and our discussions resulted in Investec financing a management buy-out (MBO) of the business. The MBO ultimately worked out well for all parties and by the end of 2009 we had repaid Investec's funding.
Now some may look at this story and view it as "The Rise and Fall of AMB". I think of it as "The Evolution of AMB". Whereas being a listed entity gives you visibility and enables the use of your shares as currency and to reward staff members, I do not see the point of remaining listed just for the sake of it. When we were listed management owned about 15% of the company, now we are six partners who control 100% of the business. It is a lean structure that works and we are able to harness its full potential. Decision making is quick and easy and we have full control of a solid balance sheet.
On a personal level, I have given a third of my life – a whole 16 years - to this company. I am the longest serving executive and it feels like I have worked for about five different companies given all the changes the company has been through from an exciting start up, to a registered bank, then a listed company and its current form as a privately owned investment banking business following the successful MBO. There have been a couple of lessons learnt along the way; firstly it is important to go into business with the right partners who will add value; secondly, you need to be cautious when you are growing too quickly; and thirdly, partnerships don't necessarily last forever. When you come together, your interests are aligned but at some point this can change and you may outgrow each other.
I cannot therefore say that I will be at the company "until death do us part". I consider myself a Zimbabwean who has settled in South Africa and so I will be really happy to close some lucrative deals in my country of origin for AMB. I think the dollarisation of the economy has improved the situation there even though I don't think that coalition governments are the answer to governance in Africa. I would prefer a ruling party that wins a free and fair internationally monitored election. That said, the signs in Zimbabwe are good and I would be very pleased to see the establishment of an AMB Zimbabwe.
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