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Fidelity Life Assurance shareholders have approved a resolution to acquire 81 percent of Langford Estate from agro-industrial group, CFI Holdings in a land for debt swap deal. An online publication reported that the company said the deal will increase its balance sheet over five-fold and become the cornerstone of its future growth.
The approval means Fidelity will assume CFI’s $18 million debt on restructured terms after shareholders of the agro-industrial conglomerate approved the sale at its extraordinary general meeting last Friday. The publication reported that Fidelity plans to use Langford’s 834 hectares of undeveloped urban land located in Harare South to expand its Southview Park high density residential housing scheme.
“This project is going to generate a bottom line of more than $200 million which will strengthen our balance sheet. We should be able to underwrite and undertake more risk on the insurance side,” Fidelity managing director Simon Chapereka was quoted as saying.
“In terms of our balance sheet, it’s moving immediately from $86 million to $108 million. By the time we finish the project, the balance sheet will be in the region of $500 million and on that we can underwrite even bigger insurance risks.” CFI owes FBC Bank, Agribank, CBZ, the Infrastructure Development Bank of Zimbabwe, NMB and Standard Chartered a combined $18 million, which will be assumed by Fidelity under the terms of the deal.
Chapereka told shareholders at the EGM that Fidelity said it had already deposited $2 million with a local bank pending approval while the balance will be paid over seven years at 10 percent interest per annum on the balance after a two year grace period. Langford will be Fidelity’s third residential property foray after Manresa Fidelity Life Park and Southview.
“Our property investments are profitable, but we’re not forgetting our core business, which is insurance but the developments give us the ability to match our long-term liabilities and assets. In any case, there aren’t so many viable investments outside of property,” he said.
“Manresa Fidelity Life Park was $7 million. In terms of Southview Park, by the time we finish that will be worth about a $100 million and Langford will be about $300 million.” Manresa, a medium density project has 317 stands which were sold out except for 20 which the group retained for internal use.
At Southview, the group expects to complete servicing of 2,100 stands under the second phase of the project by November this year for a total of 5,300 stands. About 700 stands under the project remain unsold.
Langford will have 11,624 residential stands and will generate up to 250 percent return on investment. “Langford was an opportunity we couldn’t miss. The land was bought for $18 million, and we’re going to add about $200 million to the bottom line from that,” he said.
In terms of the mix, Chapereka said the insurance business and property were at 50:50 but with the addition of Langford, it will become 40:60 with more value coming from property investments. “It’s worth noting that we’ve been able to undertake these projects because of the income from the insurance side of business,” he said. — The Source.
Online Reporter