Lifestyle Holdings has been granted Exchange Control approval to register a company in Mauritius. This is part of its campaign to seek to dilute risks associated with the Zimbabwean market and make it more attractive to foreign investors. The furniture group seeks to raise US$10 million on offshore markets to recapitalise local operations and be able to extend credit to the Zimbabwean market.
In an interview this week, Lifestyle Holdings chief executive Mr Tawanda Nyambirai said the process of registering the company was already underway.
This would pave the way for company to expand its operations.
"We have already instructed our advisors to start the registration of the company in Mauritius,” he said, “and as soon as this is done, we will move into foreign markets".
“Investors are still wary of investing in the Zimbabwean market. So, once the Mauritian company is up and running, we will then resume negotiations with investors.”
After registration, Lifestyle Holdings Zimbabwe will become a 100 percent subsidiary of Lifestyle Holdings Mauritius. The Mauritian company will take over Lifestyle Zimbabwe and the shareholders in Lifestyle Zimbabwe will subsequently get the shares in the new holding company.
Mr Nyambirai said by registering a company in Mauritius, Lifestyle Holdings would have access to financial resources on international financial markets, which local firms have struggled to access due to the perceived risk associated with the country.
He said capital was expensive on the local market and the company needed cheaper funds to extend credit at even more relaxed terms, especially to civil servants who constitute the biggest chunk of its customers.
Once the Mauritian firm has been registered, Lifestyle Holdings will issue a circular to current shareholders detailing the transaction, the rationale and the way forward on the initiative.
While Zimbabwe would remain the manufacturing hub of Lifestyle Holdings furniture operations, the company might consider, in the long term, expanding to other countries such as Botswana, in pursuit of low-cost manufacturing.