eBusiness Weekly
CBZ Holdings, which has agreed to buy a significant stake in First Mutual Holdings, says it will offer to buy out minority shareholders once it gets a controlling stake. CBZ is acquiring 31,22 percent of FMHL from NSSA and according to the terms of the contract, the consideration is a blend of cash and a share swap in a 30/70 ratio.
The rationale behind the share swap was to leverage CBZ’s strong share price on the Zimbabwe Stock Exchange and use it as currency for this transaction. In an interview with Business Weekly last week, CBZ chairman Marc Holtzman said, “We want to have the full control of FMHL and an agreement to buy an incremental stake is in place with NSSA and once that is done, we will make an offer to minority shareholders in order to delist and wholly assimilate the insurer.”Under Zimbabwe Stock Exchange listing requirements, a single shareholder with at least 35 percent shareholding must make a mandatory offer to minorities. If the offer is accepted and the public ends up having less than 30 percent of the listed company, the entity will have to delist.
The bank’s management believes this transaction will unlock further value for existing shareholders and allow for more wealth creation.
Holtzman said, “The cash component will be paid in USD as this was at the request of the seller and we ultimately believe this is a sound investment given the quality of the asset being purchased and the diversity FMHL will bring through its investments in the SADC region.”
CBZ Holdings is one of the leading financial institutions in Zimbabwe and has grown significantly over the last decade and in terms of delivering value and growth to its shareholders in a sustainable manner the board has always communicated its intention. According to the chairman, the Group is entering this merger as a way to diversify the earnings of the group and ensure value is retained for shareholders and as well as to strengthen its domestic and regional footprint and become a truly Pan-African financial institution. NSSA earlier this year said it was reducing its shareholding in FMHL and creating a strategic alliance around its 100 percent-owned subsidiary, National Building Society to unlock value.
It said it would sell 31,22 percent of its 66,22 percent stake in FMHL and remain with 35 percent. The size of NSSA’s shareholding, which it held since 2012, violated the regulations of both the Zimbabwe Stock Exchange and those of the Insurance and Pensions Commission, the sector’s regulator.
