Fidelity offer 18% higher than forecast


Ndamu Sandu

FIDELITY Life Assurance Ltd’s Initial Public Offer (IPO), which closed last Friday, brought in $2,362 billion, 18% ahead of their forecast.



e=”Verdana, Arial, Helvetica, sans-serif”>Managing director Simon Chapereka said the offer had attracted 3 988 individuals and investors.


He said the public’s response showed that they had confidence in the stock.


The Fidelity boss said his company expected the scrip to rise in terms of price after listing on the Zimbabwe Stock Exchange (ZSE).


The $2 billion is in addition to the $500 million raised through the rights issue and injected into the company by Zimre Holdings Ltd (ZHL), the majority shareholder, with a stake of 52%.


Of the IPO proceeds plus the $500 million injected by ZHL, $1 billion would go to IT development, $500 million to product development, branch networking accounting for $500 million, working capital taking $312 million and $188 million covering share issue expenses.


He said as part of its expansion programme, a new branch would be opened in Kadoma today.


Another will be opened in Chiredzi in two weeks’ time.


“Judging by our performance by the half-year results we are 40% above budget, ” he said.


The IPO opened to the public three weeks ago when 698 643 969 ordinary shares at 290 cents went up for grabs representing 48% of the issued share.


In the year to December 31 2002 results, Fidelity Life contributed 3% ($198 million) to the group’s gross premiums to help ZHL post a credible 355% increase in gross premiums to $24,8 billion from $5,4 billion in the year comparable.


Fidelity’s core business is provision of group pensions and industrial life products.


ZHL has indicated its intention to separate the reinsurance business from the listed holding company and also list the reinsurance company separately.


The largest institutional investor in the IPO has 172,7 million shares, which accounts for 24,72% while the minority investor with 1 500 shares accounts for 0,21%.


Analysts said the listing could generate interest mainly from long-term investors in the market who are willing to buy and hold.


The NicozDiamond IPO created much hype but the share price prevailing has left short-term profit-takers thinking twice about investing in insurance stocks.


If listed, Fidelity would become the fifth insurance counter to join the bourse, which has been the best performing market since 1999.


It would be the third counter to list in the year after brick-moulding firm, Willdale that listed in February and emerging telecommunications giant Celsys, which joined the stock market in April.