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Tapiwanashe Mangwiro Senior Business Reporter

Zimbabwe Stock Exchange (ZSE) listed financial services group, CBZ Holdings, plans to transform its operations into a pan – African banking group once it has acquired a stake in insurer, First Mutual Holdings (FMHL).

CBZ is acquiring 31,22 percent of FMHL from National Social Security Authority (NSSA) and according to the terms of the contract, the consideration entails a blend of cash and a share swap in a 30/70 ratio.

The rationale behind the share swap is to leverage CBZ’s strong share price on the Zimbabwe Stock Exchange and use it as currency for this transaction.

The bank’s management believes the transaction will unlock further value for existing shareholders and allow more wealth creation.

CBZ chairman Marc Holtzman said, “The cash component will be paid in US dollars as this was at the request of the seller and we ultimately believe this is a sound investment given the quality of the asset being purchased and the diversity FMHL will bring through its investments in the SADC region.”

CBZ operates one of the largest financial institutions in Zimbabwe and has grown significantly over the last decade, delivering value and growth to its shareholders in a sustainable manner the board has always intimated.

The banking group is pursuing the merger as a way to diversify the earnings and ensure value is retained for shareholders while also strengthening its domestic and regional footprint and becoming a truly Pan-African financial institution.

“As a bank, we were given a mandate by His Excellency President Mnangagwa to create a Pan – African bank that will drive growth in the country as is done by other financial institutions,” Holtzman said.

CBZ also has a desire to become a regional player. The acquisition of FMHL is a key part of this process as they have successfully established themselves in other jurisdictions within SADC and the goal of this merger is to maximise shareholder value and create an important corporate citizen in the process.

The bank also sees the merger as a way to gather the best financial talents in this country under one roof and use those talents to build and develop this nation and become the center of financial transactions in this region.

However, questions have been asked about how the existing shareholders feel about the prospect of being diluted due to the share swap.

Mr Holtzman said whilst shareholders in CBZ will experience a small dilution of about 8 percent from this transaction, the substance of the transaction is such that the shares are being exchanged for assets in a valuable entity that has been appraised by independent third parties.

He believes that the effect of this is that with the unlocking of synergies between the businesses, the dilution experienced will be far outweighed by the value gained by the company’s shareholders.

Asked if there will be any retrenchments, the chairman said this transaction presented an opportunity to bring together a huge pool of experience and talent and that it was their intention to use the talent to create a true market leader.

“We, therefore, expect that such a transaction will present the respective staff with new and bigger opportunities to grow and develop together with these businesses. 

“Any decisions will be based on merit as we will have an independent consultant to ensure the right people are in the right jobs,” he added.

According to the chairman, the company needs every personnel as it is failing to get them from the local scene and have in some instances gone to recruit in the diaspora, so there will be casualties but to a very minimal effect.