CBZ Holdings Limited (CBZHL) is set to complete the acquisition of a 31,22 percent stake in First Mutual Holdings (FMHL) following approval of the transaction by shareholders at an extraordinary general meeting on Monday.
Group chairman, Marc Holtzman, said the main aim for the transaction was to create an institution that is well calibrated to take any local risk and support operations in the region.
“The intention is to have one big, strong insurance company, therefore, the idea is to merge the operations in the short term and this will be done as soon as possible,” he said during a post-EGM briefing to journalists.
Prior to the transaction, CBZHL held 3,23 percent shareholding in FMHL through a special purpose vehicle, PIM Nominees (Pvt) Limited, and the acquisition of the additional shares from NSSA, constituting 31,22 percent of the issued ordinary shares of FMHL, takes CBZ Holdings total shareholding to approximately 34,45 percent.
Mr Holtzman said the transaction would be a mixture of cash and equity and the cash will be raised from the group’s assets.
“The cash portion is US$21 million and the split in terms of the cash and equity swap is 30/70 percent split.
“The US$21 million will be paid in 18 months, but an amount of US$10 million will be paid within ten days of the fulfilment or waiver of the conditions precedent, while the balance of US$11,2 million would be paid over the eighteen months period,” he said.
He noted that there were a lot of complementary assets and resources that the group had, therefore, in some areas CBZ might be stronger while in other areas FML may be stronger.
“This is a great opportunity to take the best in the market and within both companies and to create what will be the leading insurance company in the country,” he said.
CBZ Holdings group chief executive, Blessing Mudavanhu, added that this would also give CBZ Holdings an opportunity to increase regional presence which it didn’t have prior to this marriage.
“We have a small, but profitable insurance business and this gives us scale to grow our insurance business, and therefore, as a holdings it allows for real diversification for the financial holdings group,” he said.
He noted that FML was the second largest insurance company in the country; therefore the transaction would fit within the group’s insurance business.
FMHL has successful business operations in Botswana, Malawi, Mozambique and Zambia. Mr Mudavanhu said that would give the group the scale to compete with large insurance companies as FML currently commands about 35 percent of the insurance industry market share.
“We have opened a Johannesburg representative office that will play a leading role in this regional integration with First Mutual subsidiaries,” he said.
According to Mr Mudavanhu, the group would fulfill all steps required and there will be an offer to minorities at some point which will culminate in the de-listing of FMHL from the Zimbabwe Stock Exchange.
Commenting on the impact of the transaction on staff, Mr Holtzman said the group had a specific employment process to select the best talent.
“We will look at the best talent in CBZ and FML and combine the two to drive our ambition for growth, therefore there should be no many redundancies within the organization.
“We will deal with that on a case by case basis. There will be a process that Blessing (CBZ CEO) will oversee and that will be efficient and transparent, and there will be no bias for CBZ as the acquirer, but we will have the best talent,” he said.
On FML properties, he said the group has recruited on its advisory board an international expert on property, who manages various global property portfolios.
“He will come on the advisory and bring with him expertise on how to modernize and monetize our property portfolio and help with the integration of FML Properties,” he said.