Rajan Mahtani, the chairman of Finance Bank, made an exciting announcement this week, as the state media Times of Zambia and Zambian Daily Mail both published articles announcing that the financial institution planned to float as much as 25% of its shares not only on the Lusaka Stock Exchange (LuSE), but also on the Johannesburg Stock Exchange (JSE), Nairobi Stock Exchange (NSE), and the London Stock Exchange's Alternative Investment Market (AIM) by the end of the year.
In additional to these bold plans, Mahtani also said that Finance Bank would be investing some $10 million to reopen three branches in Malawi, where the bank was banned several years ago over money laundering allegations.
"Finance Bank will initially list a minimum of 25 percent shares and later increase it up to 40 percent. The 25 percent will be offloaded on the various markets and it depends which market will absorb the shares quickly," Mahtani told the Daily Mail in an interview.
Mahtani says that these ambitious plans to publicly list on so many stock exchanges is aims to "expand its footprint and take advantage of the growth opportunities in the sub-Saharan Africa market."
However a number of analysts familiar with financial markets in the Southern Africa region are expressing their doubts over the feasibility of Finance Bank's plans, as the same promises have been made several times in the past yet have never come to fruition.
On April 29 of this year, Mahtani similarly told the Times of Zambia that Finance Bank would list, and that they would be opening new branches in Malawi in the next six weeks (by June 15, 2014), however these promises never panned out.
A year earlier, Mahtani's media team distributed a transcript of a "speech" that took place on April 23, 2013, claiming that Finance Bank would raise $250 million on Lusaka Stock Exchange, and that the IPO would be launched by October 2013 - another deadline that was never met.
Aside from these missed deadlines, financial analysts have pointed out that a $250 million offering would be near impossible on Lusaka's market.
"Raising $250 million on the local market would be pretty tricky," said Chenge Besa, an analyst at Stockbrokers Zambia Ltd., in an interview with Bloomberg. "Is it feasible on the local market? Probably not."
Turning the clock back even further, Mahtani gave a statement back in October 2011 to ZNBC also promising to publicly list the company, shortly after President Michael Sata had returned the bank to his ownership.
Under the administration of President Rupiah Banda, the Bank of Zambia (BoZ) suspended shareholder interests in Finance Bank after an investigation discovered that more than 56% of the bank was owned by Mahtani via intermediaries, which is a violation of the Banking and Financial Services Act. President Sata returned the bank to Mahtani, one of his primary financiers, within three weeks of taking power before the Commission of Inquiry was able to form to investigate the handling of the bank's liquidation.
As the Government Gazette which issued the BoZ findings on Finance Bank has never been withdrawn, analysts say that Finance Bank's assets cannot safely be offered to market, as a possible change in government could result in this matter being revisited.
Taken altogether, many analysts believe it is difficult to take Mr. Mahtani at his word with regard to the plans for Finance Bank to list publicly, when the same statements have been made for almost three years with no progress.
Mahtani has also received a chilly reception in response to his stated interest in listing on AIM by the British media, where other companies featuring disputed business practices have caused damage to the exchange.
Most recently, the Independent reported on "documents appearing to show a US judge authorising American assistance in a Zambian criminal investigation into Mr Mahtani's business dealings."
Earlier articles in the British press asked the question, "will London have the appetite for the business with such an unusual history?"
Other sources believe that Mr. Mahtani would avoid doing a public listing in a place like London, as it could become a future legal venue for a number of litigious disputes he has with his opponents, including the original owners of the Zambezi Portland Cement company, among other parties claiming damages. By doing an initial public offering (IPO) in a foreign market, Finance Bank could find itself subject to a wide variety of new legal claims that have failed to advance in Zambian courts.
Finance Bank may in fact prove their doubters wrong and succeed in listing on the LuSE, however, with regard to the claims to list in Kenya, South Africa, and London, it would be interesting to see a statement of confirmation from Credit Suisse, the bank alleged to hold a 40% shareholding in Finance Bank (though the Bank of Zambia has previously disputed this shareholding as a disguised loan).
Many questions surround the Swiss bank's involvement with Mahtani's Finance Bank, which in addition to facing a ban in Malawi based on money laundering allegations, was also being investigated in 2011 with assistance from the U.S. Department of Justice.
When Credit Suisse first acquired its 40% stake in Finance Bank, Mr. Mahtani told Reuters on April 8, 2008, "Together with our colleagues at Credit Suisse, we will also explore the opportunity to simultaneously list Finance Bank Zambia on the London and Johannesburg Stock Exchanges."
However, more than six years later, the listings have yet to occur.