By Dr. Admire Maparadza Dube
HARARE – IN THE murky world of corporate takeovers, few deals scream “betrayal” louder than the recent sale of Truworths Zimbabwe to Valfin Investments for a mere US$1. What appears on paper as a lifeline for a struggling retailer is, upon closer inspection, an audacious wealth transfer that has left small investors reeling and creditors holding the bag. This isn’t just another business transaction gone wrong—it’s a masterclass in how opaque financial engineering can strip assets from unsuspecting stakeholders while enriching those pulling the strings behind the scenes.
For years, Truworths Zimbabwe was a household name, a symbol of resilience in one of Africa’s most volatile economies. But beneath its glossy storefronts lay mounting debts totaling US$3.27 million—a figure that included US$2.06 million in net liabilities and US$1.04 million earmarked for severance payments to loyal employees. Yet these numbers, daunting as they may seem, were far from insurmountable.
At the time of the sale, Truworths’ US$5.06 million valuation of assets did NOT include the debtors’ book, which was separately valued at US$2 million as part of the business transfer to Valfin Investments!
This presents a staggering asset base that could have been leveraged to stabilise operations or even spark a turnaround. Instead, the debtors book itself was, as part of dismembering of Truworths, handed over to First Mutual Microfinance, under circumstances conjuring some disquiet.
The terms? Unrevealed. The justification? Questionable at best.
To understand the gravity of what transpired, consider this: shareholders who once held stakes in a company with tangible assets worth millions now find themselves staring at zero. Their shares, once traded on the Zimbabwe Stock Exchange (ZSE), have been delisted, leaving them locked out of even any future potential recovery under new management.
Meanwhile, Valfin Investments walks away with control of a brand, carrying decades of goodwill, physical assets, and potentially some lucrative consideration from moving the debtors’ book to First Mutual Microfinance (FMM) – all for the princely sum of US$1. If this sounds like highway robbery, it’s because it might very well be.
What makes this saga all the more infuriating, at least for the individual investors in Truworths, is the blatant disregard for fairness shown to them. These are not institutional players with armies of lawyers and accountants; they are ordinary Zimbabweans who trusted their hard-earned savings to a publicly listed company.
As for “ringfenced creditors”, they may as well feel just as aggrieved, although they have something out of the deal. They’re being asked to swallow the bitter pill of unsecured debentures issued to them – paper promises stretched over 6 to 24 months at an interest rate of 8%.
To call this inadequate would be an understatement. In Zimbabwe’s abrasive economic environment, where real returns are not a given, such terms amount to a little more than kicking the can down the road. And let’s not forget: these same creditors saw their claims ringfenced and converted into long-dated obligations without so much as a whisper about convertible notes or equity participation.
Why? Because Valfin knew better – they knew the US$2 million injection wouldn’t magically fix Truworths’ woes but instead serve as a Band-Aid slapped onto a gaping wound.
The parallels between this deal and other African corporate scandals are impossible to ignore. Kenya’s Uchumi Supermarkets collapse in 2015 saw similar allegations of asset stripping and opaque restructuring, leading to lawsuits and regulatory intervention. Nigeria’s Oceanic Bank scandal in 2009 exposed insider dealings that ultimately required government bailouts.
Both cases underscore a pattern endemic to emerging markets: when governance frameworks are weak, opportunists thrive. Zimbabwe, unfortunately, seems no exception.
But perhaps the most damning aspect of this entire ordeal is the sheer lack of transparency surrounding key decisions. Why was the debtors’ book sold off separately? Who stands to benefit from its acquisition by FMM? Certainly not the individual investors. Was there any related-party involvement between Valfin and First Mutual?
These questions demand answers – and yet none have been forthcoming. It’s almost as if someone doesn’t want us to look too closely. Almost.
A forensic audit is urgently needed to untangle the web of transactions that led to this outcome. Such an investigation should scrutinise every line item, every valuation, every handshake agreement that paved the way for Valfin’s takeover. Regulators must step up too.
The Zimbabwe Securities and Exchange Commission (SEC) and Competition and Tariff Commission (CTC) have a duty to ensure compliance with disclosure norms and antitrust laws. Failure to act decisively will only embolden others to follow suit, further eroding trust in Zimbabwe’s already fragile financial ecosystem.
And then there’s the human cost – the employees facing uncertain futures, the pensioners watching their nest eggs evaporate, the families counting on dividends that will never materialise. For them, this isn’t just a story about numbers on a balance sheet; it’s a betrayal of hope, a reminder of how easily power can be abused when accountability falters.
So where do we go from here? Legal recourse remains an option, albeit a challenging one. I’m almost compelled to institute a one-person class action. I have the capacity to prove financial impropriety, or negligence at least. And enough legal minds in my team to successfully file. We’ll see.
Minority shareholders and creditors could also band together to petition regulators to intervene, demanding greater oversight and enforcement of corporate governance standards.
But beyond litigation lies a broader imperative: reform. Zimbabwe needs stronger safeguards to protect vulnerable stakeholders from predatory practices. Transparency must become non-negotiable, and penalties for misconduct must carry real teeth.
As we reflect on this debacle, one truth stands out starkly: something is profoundly wrong when a company valued at millions can be sold for a single dollar, where other options are available. This isn’t capitalism – it’s cannibalism, plain and simple. And until justice is served, until those responsible are held accountable, the wounds inflicted on Truworths’ shareholders and creditors will continue to fester.
This is not just a cautionary tale; it’s a clarion call. A call for vigilance, for accountability, for change. Because if we allow deals like this to pass unchecked, we risk normalising a system where the powerful prey on the powerless – and that, dear fellow investors, is a future none of us can afford. Literally and metaphorically.
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