HARARE – The wait continues for minority shareholders in First Mutual Holdings Limited (FMHL) as CBZ Holdings Limited (CBZHL) seeks regulatory approval to acquire additional shares.
While CBZHL finalised the purchase of a controlling stake in FMHL from the National Social Security Authority (NSSA) in September 2023, Zimbabwe Stock Exchange (ZSE) regulations require them to extend an offer to remaining shareholders.
This mandatory offer has been prepared by CBZHL, but its publication hinges on approvals from both the ZSE and the Competition Tariff Commission (CTC).
The CTC is currently reviewing the transaction to ensure it complies with competition laws, while the ZSE awaits this green light before proceeding with their own review of the offer.
While the specifics of the offer haven’t been made public yet, CBZHL has advised FMHL minority shareholders to be cautious when trading their shares. This could suggests the offer might be financially attractive, potentially impacting the share price.
“Further to the Notice to Shareholders of FMHL issued by CBZHL on 17 January 2024 relating to the Mandatory Offer in accordance with the ZSE Listing Requirements and the Companies and Other Business Entities Act (Chapter 24:31), shareholders are advised that CBZH is still in the process of engaging with the Zimbabwe Stock Exchange (ZSE) and Competition Tariff Commission (CTC) in relation to the approval of the transaction to acquire additional shares in FMHL in terms of the Competition Act [Chapter 14:28]
“At this stage the CTC has been notified of the Mandatory Offer and are in the process of reviewing the transaction in terms of the Competition Act (Chapter 14:28).
“ZSE has been advised of the current developments and is expected to proceed to review the offer once the CTC approval has been secured,” read a statement by CBZHL group chief governance officer Rumbidzayi Angeline Jakanani.
The acquisition, if approved, would mark a significant step for both companies. CBZHL, already Zimbabwe’s largest banking group, could further solidify its financial dominance by merging operations with the leading insurance provider, FMHL.
FMHL minority shareholders are in a holding pattern for now, awaiting the regulatory decisions and the details of CBZHL’s offer.
FMHL is a parent company that owns other companies, one of which is the controversial First Mutual Life Assurance Company (FML).
A recent forensic audit of FML revealed that policyholders may have been financially prejudiced due to the company’s non-compliance with regulations.
The Insurance and Pensions Commission (IPEC) ordered FML to pay back US$53 million and ZWL209 million to policyholders, but FML is appealing the decision.
The audit found several areas of concern, including that FML allegedly commingled funds by depositing client premiums into shareholder accounts.
It was also discovered that the company may have delayed selling an investment in Tristar, resulting in financial losses to policyholders.
FML allegedly used policyholder funds to support its funeral services subsidiary.
The company invested heavily in Rainbow Tourism Group in anticipation of gains around the 2010 World Cup, but this investment reportedly caused significant losses.
The audit suggests that FML’s board lacked sufficient independent oversight.
FML argues that the corrective order from IPEC was unlawful and that they protected policyholder interests. The company is challenging the audit’s findings in court.
