Business News of 2013-12-12

Fortiz to raise GH¢200m to wean Merchant Bank off BoG support

The management of Fortis Private Equity Limited (Fortiz) has pledged to raise GH¢200 million within six months to wean Merchant Bank Ghana (MBG) off Bank of Ghana (BoG) support. That target, it said, would be achieved through deposit mobilisation and a mobilisation drive in the retail market.

Chief Investment Officer of Fortiz, Mr Mawuli Hedo, told a cross-section of journalists in Accra yesterday that Fortiz also intended to float medium-to-long term bonds on the market as well as to adopt short, medium and long-term strategies to improve the liquidity of MBG.

He said an investment in information and communication technology (ICT) infrastructure would also be made to resolve the ICT challenges confronting the bank while investment would be made in staff training and overall improvement in conditions of service of staff.

On proposals to resolve the financial challenges confronting the bank, Mr Hedo said besides the GH¢90 million immediate investment, Fortiz would invest up to GH¢50 million by June 2014.

He said it would also aggressively recover at least 30 per cent of the bad loans of MBG within two years and strive to recover in excess of 30 per cent of the remaining loans and split the excess recoveries in a ratio of 70/30 between SSNIT and SIC and Fortiz respectively.

On why he thinks its proposal to the SSNIT was the best, Mr Hedo explained that in addition to paying GH¢90 million for a 90 per cent stake in MBG, it was also absorbing all the assets and liabilities of the bank.

“Since MBG has a negative value, Fortiz will offer existing shareholders 10 per cent stake in MBG as compensation for the loss in value. Existing shareholders do not need to pay any money upfront,” he added.

“The likely outcome of this transaction is that existing shareholders will retain 10 per cent post acquisition at no cost,” he said. Mr Hedo attributed managerial, capital inadequacy ration and liquidity issues to the woes of MBG.

He said Fortiz was currently conducting an evaluation of the personnel in the services of MBG as well as the systems and structures in place to enable it to take full control of the management and operations of the bank. A list of a seven-member board, which was initially released to the media was later withdrawn with an explanation that changes were to be made to the list.