Zimre Holdings to cede 25pc rights to Zambians

Nelson Gahadza

Zimre Holdings says it will conduct a rights issue in Zambia where it will cede its rights to selected investors in line with the country’s new policy that requires local participation at a shareholding level of 25 percent.

ZHL is a diversified investment holding company with sustainable core competencies in reinsurance and property, with investments and operations located in Zimbabwe and the Southern African region.

In the region, the group’s reinsurance business is housed under Botswana-domestic EmeritusRe International, a holding company with subsidiaries in Malawi, Zambia and Mozambique, as well as an investment footprint in Kenya, Uganda and Eswatini.

Group chief executive, Stanley Kudenga, said recently that the policy changes in Zambia and Malawi will see the group tweaking shareholding in those markets as part of efforts to capitalise on the operations.

“In Zambia, there is now a requirement for us to have local participation at the shareholding level of 25 percent. Therefore, we are looking at doing some kind of rights issue where we then cede our rights to selected investors in the local market, which means that there is capital in the local market.

“Malawi is almost the same thing, but by and large, we are also looking at complementing it with capital from the local market,” he told analysts last week.

Kudenga said the group, through an independent actuarial assessment of the depth of the markets that it operates in and the level of competitive capital that would be required, came up with a figure of US$12 million.

He said out of that US$12 million, the group has already internally deployed about US$7 million and the remaining US$5 million will need to go into Malawi and Zambia.

According to Kudenga, the group, through the merger of its reinsurance businesses in Botswana and the US$2 million in Mozambique, is part of efforts to enhance underwriting capacity in the region.

“In Mozambique, we lost business mainly because of our balance sheet, but we were quick to respond and put in US$2 million.

“This also improved even the rating for Mozambique from an international GCR rating to triple B, and that has allowed us to rebuild the business that we had lost. In Botswana, we are losing in the form of our own retention levels,” he said.

According to Chakanyuka Nziradzemhuka, the ZHL chief operating officer (COO), the balance sheet reorganisation in Botswana created value that was always on the balance sheets, and without that reorganisation, value could not be extracted.

“We had a vehicle called Emeritus International, which had all the other regional units, but it was non-operating; it was just an SPV that sits to hold.

“What we went and did with that was to collapse the operating entity, which is actually riding on its single balance sheet, and bring it into international, then expand the value that is residing on that SPV, which was not doing any business.

“When we consolidated it with the balance sheets of all these other regional operations, the capital position improved from US$3 million to the current balance sheet size of US$15 million,” he said.

Nziradzemhuka said that following the consolidation, Emeritus in Botswana is among the top three reinsurance companies that are operating in that environment.

He said Emeritus International has already started the Great Africa trek, foraging in Tanzania, Ghana, and Uganda.

“We believe everyone in these markets has had a fair share of relationships with ZIMRE before because they were trained by ZIMRE.

“Our view is that wherever there is growth potential, we will start this trek and put the money there,” said Nziradzemhuka.

On the other hand, he said the group will tilt its property portfolio towards high-yielding commercial and retail sectors through near-liquid investment structures.

As the group’s property portfolio tilted towards high-yielding commercial and retail sectors through near-liquid investment structures, its Eagle Real Estate Investment Trust (REIT) attained Prescribed Asset Status from the Insurance and Pensions Commission of Zimbabwe (IPEC) post-reporting period.

Nziradzemhuka said it is anticipated that the Eagle REIT will bring much-needed liquidity to the real estate market, especially for Zimbabwe’s pensions community.