The Sunday News
Judith Phiri, Business Reporter
CBZ Holdings Limited (CBZHL) shareholders will meet at an extraordinary general meeting this month to approve the proposed acquisition of a 31,22 percent stake in First Mutual Holdings Limited (FMHL) as part of the group’s diversification and consolidation strategy.
In a chairman’s letter to shareholders, CBZHL said the extraordinary general meeting will be held virtually at the end January.
The proposed acquisition is said to be held by the National Social Security Authority (Nssa).
If the transaction is approved by shareholders, it will take CBZHL’s stake in FMHL to 34,45 percent as it already has a 3,23 percent shareholding.
“On 26th October 2021, CBZHL and Nssa entered into a Share Purchase Agreement in terms of which CBZHL shall acquire a stake of 31.22 percent in FMHL shares held by Nssa to be settled by a combination of cash (30 percent of the total purchase consideration) and an issuance of new CBZHL shares to be allotted to Nssa (70 percent of the total purchase consideration).
“In February 2021, Nssa floated a Request for Proposal inviting formal bids for the acquisition of a 31,22 percent equity stake in FMHL.
Realising the potential synergistic opportunities between CBZHL and FMHL, the Board approved the Company’s formal bid for the acquisition of the 31,22 percent equity stake in FMHL held by Nssa.
In June 2021, the Company emerged as the highest bidder and was therefore granted the opportunity to enter into an agreement with Nssa for the acquisition of their 31,22 percent equity stake in FMHL,” read part of the letter.
It said that CBZHL currently holds 3,23 percent shareholding in FMHL, through a special purpose vehicle held under PIM Nominees (Private) Limited and the acquisition of the additional shares from Nssa constituting 31,22 percent of the issued ordinary shares of FMHL will take CBZHL’s total shareholding to approximately 34,45 percent.
Going forward, CBZHL said it intends to consolidate its position in FMHL by acquiring a control block in FMHL, hence the proposed transaction is therefore part of CBZHL’s diversification and consolidation strategy.
CBZHL will acquire 226,997,219 FMHL ordinary shares at a total consideration of ZWL$6,355,922,132 (a price of ZWL$28 per FMHL ordinary share).
Thirty percent of the total value (ZWL$1, 906,776,640) which is equivalent to US$21,197,440 will be paid in cash.
“Of that cash payment, US$10m will be paid within 10 days of the fulfillment or waiver of the condition precedent and the balance of US$11,197,440 will be paid over 18 months in three equal installments of US$3,732,480,” said CBZHL in the circular to shareholders.
It said 70 percent of the transaction value will be settled through the issuance of 1 CBZHL ordinary share for every 3,393 ordinary shares held by Nssa.
Post the transaction, Nssa will emerge as the largest shareholder in CBZHL with a stake of 24,91 percent.
CBZHL will emerge as the second-largest shareholder in FMHL but will consolidate its position by acquiring a control block of 35 percent, subject to shareholder approval at the January 31 meeting.
It added that shareholders have to approve whether or not to give directors the greenlight to make strategic acquisitions through the issuance of shares up to 10 percent of the unissued shares under the control of directors.
CBZHL has been on a transformation drive since the appointment of board banker Mr Marc Holtzman as board chairman in September 2019.
As an African investment company that is listed on the Zimbabwe Stock Exchange (ZSE), it has operated in Zimbabwe for the last four decades and has established itself as one of the leading institutions in the country.
During this period, CBZHL has built a diverse portfolio of businesses covering banking, short and long-term insurance, asset management, property investment and agriculture.
The Company has also established an offshore investment arm based in Mauritius as part of its regionalisation strategy.
