Zimre Holdings Limited (ZHL) says it has started negotiations over the disposal of some of its assets, likely including the 30.03 percent stake in NicozDiamond to state-controlled pension fund, the National Social Security Authority (NSSA).
ZimRe and NSSA are joint shareholders in an investment vehicle, Stalap Investments, in which Zimre and its wholly owned subsidiary, Baobab Reinsurance have a shareholding of 34,28 percent apiece, while the pension fund holds the remaining 31,24 percent.
As at December 31 2015, NSSA held a 13,32 stake in Zimre, while government owned 21.67 percent shareholding.
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.
Last week on Thursday, NSSA made an irrevocable undertaking to procure and deliver to First Mutual Holdings an additional 177,161,256 NicozDiamond shares or 30,03 percent shareholding, in exchange for 35,292,087 new FMHL shares.
FML is currently seeking shareholder approval to raise $17,25 million through a rights issue to finance the acquisition of a 80,92 stake in NicozDiamond, the combined shareholding of NSSA and Zimre.
The transaction is being pushed by NSSA, which is the majority shareholder in both FML (50,95 percent) and NicozDiamond (50,89 percent). NSSA is the country’s biggest institutional investor with interests spanning across various sectors. It is currently restructuring its investment portfolio.
“The board of directors of ZimRe Holdings Limited (ZHL) wishes to advise shareholders and the investing public that it has begun negotiations over the disposal of certain assets held by the company. The proceeds of the disposals shall be utilized to support the company’s new strategic endeavours,” the company said in a cautionary statement on Wednesday.
As at July 31, major shareholders in NicozDiamond were NSSA (50,89 percent), Zimre Holdings (30.03 percent) and others at (19.08 percent), analysts say it is most likely that Zimre is selling its entire shareholding in Zimbabwe’s largest short-term insurer to the pension fund.
Under listing rules, a company normally issues a cautionary statement for the disposal of assets which constitutes at least 10 percent of its total assets, pointing to the disposal of Zimre’s stake in NicozDiamond (30,03 percent) to NSSA as the two already enjoy a close relationship.Advertisement
Zimre is also in the process of transferring its regional operations to its Botswana registered, Emeritus International. Zimre plans to list Emeritus on the Botswana Stock Exchange (BSE).
In May this year, chief executive Stan Kudenga told analysts that the company intended to dispose of non-performing and non-core assets with no strategic fit to the group, unlocking value from illiquid assets and optimal redeployment of capital.
The group’s total assets amounted to $102,8 million as at December 31, 2016.
In its full year results, the company said it would consolidate the South African and Botswana based businesses. It also said the South African subsidiary would be closed by end of August 2017 with its business being transferred to the Botswana entity.
During an analyst discussion in May this year, Kudenga said 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.
The group 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 also told shareholders at the company’s annual general meeting in June this year, that the group received Zimbabwe exchange control approvals to disinvest from Continental Re Nigeria and use the proceeds to recapitalise its Mozambique Reinsurance Company unit.
Kudenga told The Source on Thursday that he was unable to give specifics of the assets under disposal.