SHAREHOLDERS of the diversified financial services group, Trust Holdings Ltd (Trust), have approved major transactions with First Mutual Ltd (FML) that will enable the two groups to create a fin
ancial behemoth rivalling major regional players.
The venture is also expected to create a partnership that will enable both to exploit local and international opportunities in the financial services sector.
The approvals were given at a Trust Extraordinary General Meeting (EGM) last Thursday.
Prominent banker William Nyemba leads Trust, while Norman Sachikonye heads FML.
Nyemba however also sits on the FML board as non-executive deputy chairman.
Shareholders approved the deal allowing FML to acquire a 40% stake in Trust Corporate Securities (TCS) which would enable the recapitalisation of the Trust subsidiary.
Trust said this arrangement would be mutually beneficial to both parties and would provide TCS with increased volumes of business from First Mutual
Asset Management’s equities investment transactions.
Another transaction approved was the plan by Trust to hive off its 100%-owned Trust Discount House and reduce its stake to 60% and the balance taken up by FML.
Explaining the rationale for the partnership, Trust said there was great demand for private banking services in Zimbabwe and beyond, and it was proposed that such services be offered by the discount house, taping into FML’s large high net worth client base, which has an ever-growing demand for specialised investment needs.
“Under private banking, the partners will be able to offer value-added services, which will ensure that client retention is maintained at the highest level and thus filter to the success of the venture. The investment by First Mutual will also provide TDH with funding capacity to undertake greater primary dealings, which will ultimately bring about improved margins for Trust Holdings,” said Trust.
Another transaction that was approved was the merger of Trust Asset Management (TAM) with First Mutual Asset Management (FMAM) into one unit.
Trust Holdings will take up a 40% equity and FML the balance.
FMAM has about $160 billion worth of funds under management and TAM about $7 billion.
Trust said FML was well established in the asset management sector and operates five unit trusts.
“It is the board’s opinion that an association between TAM and FMAM will bring immediate mutual benefits with Trust Holdings tapping into the critical mass and skills base in FMAM,” said the group.
The shareholders approved Trust’s plan to take a 40% equity stake in the newly-established African Reinsurance, in which FML would have 60%.
Trust said the investment was set to provide an opportunity to realise full integration and consolidation in financial services, as well as achieve a wholesome product diversification and additional revenue streams.
“The establishment of African Reinsurance is motivated by the fact that asset values and insurance covers are increasing at a rate far beyond the capacity that the local market can accommodate,” Trust said.
The group intends to pursue its vision of being the preferred one-stop financial services group in Zimbabwe, and would use its partnership with FML to exploit cross-selling opportunities and have an increased scope of product innovation.
In addition to access to wider distribution channels, First Mutual will also provide access to insurance products and expertise.