Financial services giant, CBZHL Holdings Limited (CBZHL) seeks to consolidate its authority in the country’s financial sector as it seeks shareholder approval to acquire a 31.22% stake in First Mutual Holdings (FMHL).
“Realising the potential synergistic opportunities between CBZHLHL and FMHL, the board approved the company’s formal bid for the acquisition of the 31,22% equity stake in FMHL held by Nssa. In June 2021, the company emerged as the highest bidder and was, therefore, granted the opportunity to enter into an agreement with Nssa for the acquisition of their 31,22% equity stake in FMHL,” Rumbidzayi Angeline Jakanani, group legal corporate secretary, said in a statement.
In order to get approval from its shareholders, CBZHL will hold an extraordinary general meeting (EGM) on January 31, 2022 to this effect. CBZHL board of directors has agreed to get into a transaction with the National Social Security Agency (NSSA), to buy the pensioner’s stake in FMHL according to a circular released by the company.
According to Jakanani, the pricing of the Proposed Acquisition of the ordinary shares in FMHL has been adjudged to be fair and reasonable by the Independent Financial Advisors, BDO Tax and Advisory Services.
CBZHL currently holds 3.23% shareholding in FMHL, through a special purpose vehicle held under PIM Nominees (Private) Limited and the acquisition of the additional shares from NSSA constituting 31.22% of the issued ordinary shares of FMHL will take CBZ Holdings Limited’s total shareholding to approximately 34.45%.
The total purchase consideration for this transaction was agreed at $6 355 922 132, a price of $28 per FMHL ordinary shares excluding transaction costs. CBZHL is looking to acquire 226 997 219 million FMHL shares
As part of the payment, 30% of the total consideration that is $1,9 billion to be settled in cash, comprises of $1,8 billion being the net cash proceeds due to NSSA after trading transaction costs of $ 91 million. The net cash proceeds due to NSSA of $1,8 billion translates to US$21,2 million after being converted at the agreed exchange rate of $85.6402 /US$.
The remaining 70% of the total consideration that is, $4,4 billion to be settled through the issuance of 46,8 million new CBZHL ordinary shares on the basis of 28 CBZHLHL ordinary share for every 95 FMHL ordinary shares.
The FMHL acquisition shares will constitute 8.23% of the CBZHL’s total issued ordinary shares after the transaction.
“The Board monitors domestic and regional trends as well as the commercial landscape to anticipate future customer needs and identify potential growth opportunities. The Board is convinced that the Proposed Transaction is an investment in a future market leader in a business with complimentary capabilities to CBZHL,” she said.
CBZHL operates within four main clusters, namely the banking cluster, insurance cluster, investment cluster and agro-insurance cluster while FMHL has diverse interests in Insurance, Funeral Services and Microfinance.
“A study of the FMHL business model presents a natural fit between FMHL and CBZHL. FMHL is a business that has also been growing over the last few years and, like CBZHL, is on the precipice of achieving true market domination. FMHL has begun expanding its operations into the region and is poised to become one of the dominant players within the SADC region.
“Furthermore, FMHL has a highly talented team of managers who have established themselves as the leading minds in their field. The value of these resources cannot be overemphasised. A strong partnership with a likeminded institution with deep pockets and access to significant funding lines is precisely what is needed to fully unlock the significant reserves of value that reside in this business and execute the regionalisation strategy of the business,” the bank said on the rationale of the transaction – Harare