Minority shareholders in First Mutual Holdings Limited (FMHL) continue to face an extended wait as CBZ Holdings Limited (CBZHL) awaits regulatory approval to acquire additional shares in the company.
In September 2023, CBZHL finalised the purchase of a controlling stake in FMHL from the National Social Security Authority (NSSA). But Zimbabwe Stock Exchange (ZSE) regulations require CBZHL to extend an offer to purchase shares from remaining FMHL shareholders.
The mandatory offer has been prepared by CBZHL, but its publication is contingent upon approvals from both the ZSE and the Competition Tariff Commission (CTC).
The CTC is currently reviewing the transaction in an effort to ensure it complies with competition laws. The ZSE will then review the offer once the CTC provides its approval.
Against this background, CBZHL has advised FMHL minority shareholders to exercise caution when trading their shares.
“CBZHL 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,” said Rumbidzayi Angeline Jakanani, CBZHL group chief governance officer, in a statement.
“The CTC has been notified of the Mandatory Offer and are in the process of reviewing the transaction. ZSE has been advised of the current developments and is expected to proceed to review the offer once the CTC approval has been secured.”
The acquisition, if approved, would be a significant development 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.
The waiting is also worsened by the ongoing controversy surrounding FMHL’s subsidiary, 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 uncovered concerning practices, including FML allegedly commingling funds by depositing client premiums into shareholder accounts. The company is also accused of delaying selling an investment, resulting in financial losses to policyholders.
FML allegedly used policyholder funds to support its funeral services subsidiary and invested heavily in Rainbow Tourism Group, leading to significant losses.
The audit also 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.
Discover more from Nehanda Radio
Subscribe to get the latest posts sent to your email.
