Econet likely to raise stake in Afre

assurance group’s planned rights issue.
The Afre board was set to meet last Friday to propose recapitalisation of the life insurance group in the wake of a crisis..
Last Friday the board was set to consider the capital issue, proposal for Econet to underwrite the rights offer and set timelines for the capital scheme.
Earlier plans to float a US$10 million rights issue to recapitalise Afre collapsed after revelations the firm and its subsidiaries dabbled in illegal inter-party transactions.
The transactions had their origins in loans the firms received from Renaissance, prompting investigations by the Commissioner of Insurance.
Afre chairman Mr Tawanda Nyambirai said his board would discuss the firm’s exposure to related firms and determine its recapitalisation needs. But he stressed the priority was to establish the extent of inter-party exposure.
Initial findings indicated Afre was exposed to inter-parties to the tune of US$6,4 million. This meant that an earlier rights offer proposal for US$10 million might not suffice.
“Management is doing an exercise,” he said. “The exercise would look at short-term issues. The short-term issues relate to inter–party exposure. Thereafter the board would look at the financial requirements of the firm.”
Econet, a 20 percent shareholder in Afre, will underwrite the rights offer and considering the liquidity squeeze in Zimbabwe, looks set to bail out the firm.
Afre’s single largest shareholder, Renaissance Financial Holdings, is currently mired in serious financial distress and might struggle to follow its rights.
RFHL holds 33 percent in Afre and Renaissance Merchant Bank reportedly needs in excess of US$55 million to recapitalise and support operations, which makes it difficult for the group to follow its rights in Afre.
But Mr Nyambirai dismissed claims that Econet Wireless was keen on taking over Afre. He said the recapitalisation of the firm was meant to protect all stakeholders.
Earlier, Econet had indicated it would divest from the Zimbabwe Stock Exchange-listed firm, citing interference from Finance Minister Tendai Biti.
Econet wanted to jettison Afre because Minister Biti had not consulted the board, management and the ZSE when it suspended trading in the firm’s shares. Afre returned to trading a week ago after a brief suspension from the bourse.
“I don’t know what kind of notion that is in our market that Afre is owned by an individual with a 30 percent stake. What about the other 70 percent?
“What about the interests of the other 70 percent shareholders – small ordinary shareholders and policyholders of the company?” asked Mr Nyambirai.
But becoming a major or majority shareholder in Afre makes sense for Econet considering its multimillion-dollar mobile phone life scheme with the firm.
The firms partnered with Namibia’s Trust Co in offering mobile-based life assurance service EcoLife, which covers over 1,6 million Econet customers.
As a sign of its commitment to the Afre investment, Econet has reappointed Mrs Tracy Mpofu, Krison Vengai and John Gould to the Afre board.
New appointments include Mr Nyambirai, human resources expert Mr Misheck Manyumwa, banker Mr George Nyashanu and former Afre chief operating offer who is now the chief executive officer, Mrs Sibusisiwe Ndlovu.
The firm has also established a related party committee consisting of independent directors Mr John Mafungei, Dr Daud Dube and Mr Manyumwa.