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FML needs more cash

Eric Chiriga

FIRST Mutual Life Ltd (FML) intends to raise new capital of $52,5 billion by way of an issue of further shares through a private placement and proposed rights offer.

NT face=”Verdana, Arial, Helvetica, sans-serif”>”FML proposes to raise $17,5 billion by way of a Rights Offer to current shareholders who elect to keep their shares in terms of the demutualisation of the Society,” said group chief executive officer Norman Sachikonye.

The Rights Offer will be on the basis of one ordinary share for every five ordinary shares held.

Recently FML received approval from the Ministry of Finance and Economic Development and the Commissioner of Insurance to transform the society into a quoted company.

The approval from the ministry and the Commissioner of Insurance were in terms of Section 33 of the Insurance Act.

Diversification initiative by FML began five years ago with the establishment of First Mutual Asset Management.

“FML is offering its members the right to acquire further shares. It will seek to list all the shares on the Zimbabwe Stock Exchange so that the shares can be bought and sold on the ZSE,” Sachikonye said.

Concurrent with the Rights Offer, a placing to a few select institutional investors will be undertaken and will seek to raise the funding required for the continued growth of the group.

The company expects to raise $35 billion from the deal.

The price that successful applicants will pay and that policyholders selling their shares through the Sell Offer will receive, will be the “offer price.”

The offer price is $35 per share.

Proceeds from both the rights offer and the private placement would be used in the diversification of the group’s business interests by establishing a reinsurance company, a discount house and a stock broking firm, the group says.

Diversification initiative by FML began five years ago with the establishment of First Mutual Asset Management.

He said while waiting for listing, FML would invite institutional investors to submit bids to buy shares prior to listing.

This will include the shares being sold by shareholders in the sell offer and shares being issued by FML to raise additional capital.

“However, listing may be postponed if the board considers it is in the best interest of FML, for instance if market conditions are unfavourable,” Sachikonye said.

FML would become the sixth insurance counter to list on the ZSE, the best-performing marketssince 1999, after Old Mutual, Zimre Holdings Ltd (ZHL), NicozDiamond, Sare and Fidelity Life Assurance of Zimbabwe (Pvt.) Ltd.

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