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Restructuring Zimre to list regional operations in Botswana

 

08/05/2017 00:00:00
by Source.co.zw
 
 
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HARARE: Restructuring conglomerate Zimre Holdings Limited (ZHL) will consolidate its regional operations under an entity to be listed in Botswana, as it continues its recovery following its removal from Unites States sanctions list early this year, chief executive Stanley Kudenga told analysts on Thursday.

The group, with interests in insurance, property and agriculture was removed from United States sanctions list on January 12 this year.

It was placed on the list in 2008 when government was its majority shareholder. As at December 31 2015, government owned 21.67 percent shareholding while the state pension fund National Social Security Authority had 13.32 percent.

However, former Pioneer shareholders Simon and Hamish Rudland emerged with 40 percent control of ZHL following the company’s $15 million rights issue in 2015.

The company will also recover $1,5 million in funds that were blocked when it was placed under sanctions.

The group will exit Harare-based Colonnade Reinsurance in which it owns 61 percent and its wholly owned South Africa-based Emeritus Reinsurance, citing high operating costs.

It also plans to sell off Zep Reinsurance in Kenya for $2,5 million but is apprehensive about putting the money into the local market as it could be converted into bond notes.

Kudenga said Zimre will also sell its 1,47 percent stake in Continental Reinsurance of Nigeria and plans to reinvest the proceeds in its Mozambique Reinsurance unit.

The group holds a controlling 51 percent shareholding in the Mozambican firm, which it says is very profitable. With the insurance penetration rate in Mozambique at less than three percent, the market presents good opportunities for growth, said Kudenga.

Additionally, Zimre will consolidate all regional operations under a single company called ‘Emeritus International’ which will list on the Botswana Stock Exchange (BSE).



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Zimre will hold at least 51 percent in Emeritus International. The decision to list the company on BSE will enable it to raise funds without liquidity challenges faced in the local market. The structure for the company has received RBZ approval, Kudenga said.

“Emeritus International structure will be used as a vehicle to mobilise capital for group expansion and strengthening the regional foothold,” said Kudenga.

Its regional operations include the wholly owned Malawi Reinsurance and Zambian Reinsurance while it also has 91 percent in First Reinsurance of Botswana and Uganda Reinsurance where it holds 2,43 percent shares.

“We want to attain blue chip status and grow into an expansive and diversified investment group,” Kudenga said.

Exiting from the companies will enable the group to focus on key profitable operations, he added.

Zimre wants to increase its footprint in the property sector and is planning to increase its stake in listed subsidiary Zimre Property Investments (ZPI) beyond the current 51 percent.

ZPI managing director, Edson Muvingi who was also present at the presentation, said ZHL will focus mainly on student accommodation in Bulawayo for NUST students and retail outlets rather than focusing on the saturated residential market.

Kudenga said Zimre will increase its stake in CFI for diversification purposes and is confident that the company will improve its financial performance following recent restructuring.

Zimre holds a 44 percent stake in CFI through Stalap Investments, and plans to raise that to around 51 percent.

Kudenga said the group also had intended to increase its stake in Zimbabwe’s largest short-term insurer, Nicoz Diamond in a bid to take corner the insurance market and eventually delist the company.

NSSA has since raised its holding in the firm to 51 percent.

The group intends to maintain its 15 percent stake in Cell Insurance and grow its shareholding in  Credsure, which currently stands at 24 percent, Kudenga added.

It is also in talks with the central bank to dispose of its stake in the Infrastructural Development Bank of Zimbabwe (IDBZ).

Kudenga said the group is satisfied with its 49 percent stake in ZUPCO, adding that the parastatal has properties with good value.

In its full-year results released last month Zimre Holdings reported that it narrowed its loss by 90 percent to $2,2 million for the full-year to December, from $23,1 million recorded in the preceding year on increased business retention and cost containment measures.


 
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