THE directors of CBZ Holdings (CBZ) are seeking shareholder approval to conclude the acquisition of a 31,2 percent stake in First Mutual Holdings (FML) shares held by the National Social Security Authority (NSSA).
In a Zimbabwe Stock Exchange filing last week, the financial services group said it had reached an agreement with the state pension fund for the transaction.
Subject to shareholder approval, CBZ will acquire 226 997 219 FML ordinary shares.
The deal will give the country’s largest financial services group a foothold in one of the country’s largest insurance groups.
“CBZ and NSSA entered into a share purchase agreement in terms of which CBZ shall acquire a stake of 31,22 percent in FML shares held by NSSA to be settled by a combination of cash (30 percent) and an issuance of new CBZ shares to be allotted to NSSA (70 percent),” CBZ said in a circular to shareholders.
CBZ currently holds a 3,23 percent stake in FML, and the acquisition will increase its shareholding to approximately 34,45 percent.
Going forward, CBZ intends to consolidate its position in FML by acquiring a control block in FML – 35 percent as defined by the Companies Act.
“The proposed transaction is therefore part of CBZ’s diversification and consolidation strategy.
It is a related party transaction for the purposes of the ZSE listings requirements because NSSA is a significant shareholder (holding 10 percent or more of the voting rights) in CBZ, with an equity stake of 18,17 percent.
Consequently, NSSA will be precluded from voting at the EGM on the resolution regarding the proposed transaction.
FML, which is listed on the ZSE, is a leading financial services group that has been creating value through risk management, wealth creation and wealth management predominantly in the insurance sector.
FML’s major shareholders as at November 30 last year were NSSA – 65,53 percent, QuantAfrica Wealth Management – 9,30 percent, and Capital Bank Corporation -7,02 percent.
CBZ has divided its business portfolio into four main clusters to ensure complementary businesses are grouped and their synergies exploited.
The four key business clusters are banking, investments, insurance and agriculture. As a result, significant synergies have been unlocked both within each cluster of businesses and among the clusters themselves, the group says.