CBZ targets merging operations with FMHL

Nelson Gahadza

Senior Business Reporter

CBZ Holdings says its strategic thrust is to move towards merging its operations with those of First Mutual Holdings Limited (FMHL) after the banking group acquired a 36 percent stake in one of Zimbabwe’s leading financial services companies, in line with its growth strategy.

Mr Blessing Mudavanhu, the CBZ Holdings chief executive, said the acquisition marked a significant milestone in the group’s pursuit of its long-term growth strategy.

“Our strategic thrust on the significant acquisition is to move towards merging the operations of CBZ Holdings and First Mutual Holdings to achieve the scale needed to compete against larger corporates in Zimbabwe and the region,” he told a media briefing yesterday.

He said the FMHL business model presented a natural fit between FMHL and CBZHL as it brought to the group a giant leap into the insurance space. He added that FMHL had operations in the SADC region, and these would give CBZH subsidiaries a stepping stone for expansion into the region.

“This transaction offers diversity and synergistic opportunities among the operational units of our two businesses. The exploitation of synergies between these two businesses should unlock more value for the combined entity, looking to enhance its insurance and property businesses further and widen its product offering to its significant client base.

“Combining these with the advantages of the largest bank in the country will present a well-oiled bancassurance model to the Zimbabwe market,” said Mr Mudavanhu.

According to Mr Mudavanhu, the businesses, combined, would expand the trading abilities of both entities across geographies, thereby permitting the extension of product management and distribution capabilities, improving customer product offerings, and better absorbing market shocks through a deeper and further diversified capital base.

“We believe this transaction will add significant shareholder value to both entities but, more importantly, to our country, as we will ensure the economic mass acquired will be used to underwrite larger transactions in the country,” he said.

Mr Mudavanhu added that the group’s clients will be the greatest beneficiaries of this newly acquired size because they will have access to a wider range of products and services, as well as enhanced support and expertise.

FMHL chief executive, Mr Douglas Hoto, said the transaction was largely informed by the need for Zimbabwe to have a financial institution that is consistent with national interests and the national development agenda.

“When FMHL was chosen to lead the insurance cluster consolidation and combine with a strong bank, we wanted to create capacity to finance and secure investors. for projects

“We believe that the transaction is the beginning of a journey, and we will grow. The insurance business is to mobilize funds,” he said.

He added that the group is looking at a new Zimbabwe with a different economic ethos. “We are doing this deal mindful of the informal sector, where we can build less structured economic possibilities in Zimbabwe to convert them into a new vision that is inclusive and creates an upper middle-class economy,” said Mr Hoto.

NSSA acting general manager, Dr Charles Shava, said the transaction marks the culmination of a journey that started in 2020 when NSSA embarked on an investment refocus strategy that involved consolidation and optimization of our investments to unlock value for the benefit of our members.

He said NSSA, as a social security organisation, currently has investments coming from two schemes, which are the pensions and other benefits scheme and the accident prevention and workmanship compensation schemes.

In pursuit of this objective, Dr Shava said NSSA adopted a phased approach, in which phase 1 involved the consolidation of the short-term insurance, NicozDiamond, into FMHL through the disposal of our stake in NicozDiamond in return for FMHL shares.

“The transaction helped to strengthen FMHL’s short-term insurance business, solidified its market standing as one of the leading short-term insurance companies in the country, and also strengthened our investment in the insurance industry,” he said.

Dr Shava noted that the CBZ transaction leaves NSSA as the largest player in the stock market as well as both in CBZ and FMHL because it is going to remain the single biggest shareholder in FMHL as well as CBZ.

“We are confident this strategy will enhance the sustainability of our schemes to the benefit of our members and the country at large. This proves to be one of our best stock market decisions in a long time,” he said.