BY SHAME MAKOSHORI
THE National Social Security Authority (Nssa), this week consolidated its shareholding in the Zimbabwe Stock Exchange (ZSE)-listed financial services powerhouse, CBZ Holdings (CBZH) Limited, as it intensified a long-held ambition to pounce on the most viable stocks in the blue-chips league.
The Zimbabwe Independent can exclusively report that following the deal in which more than US$60 million exchanged hands, Nssa shored up its CBZH interest to between 27% and 28%, becoming the largest stockholder in the country’s biggest banking group.
Previously, the state-run compulsory pension fund controlled 18% in the business.
As reported by the Independent last week, Nssa in turn disposed of 31,22% of its shareholding in listed financial services giant, First Mutual Holdings Limited (FML) to CBZH, which is said to have paid for part of the deal in hard currency.
Nssa is expected to announce to stakeholders today that it “pushed for a transaction cash in hard currency and equity in a 30:70 split”, with proceeds expected to be deployed towards enhancing the fund’s investments in offshore facilities.
The transaction also saw Nssa overtaking a nominee called Akribos, which had emerged as the biggest shareholder in CBZH following a surprise transaction last year, which left the vehicle controlling the largest stake, followed by the Government of Zimbabwe with 21,07% and Libyan Foreign Bank.
Details of several tie ups obtained by the Independent indicated that the past few weeks have been filled with high activity on the acquisition front.
Both sides confirmed the transaction yesterday, but played their cards close to their chests on the amounts involved.
“The proposed settlement is in line with the advice of our financial advisors but at this time we cannot disclose the quantum or nature of settlement as the other party still has housekeeping issues to attend to,” Nssa general manager, Arthur Manase, told the Independent. “I am, however, confident that we have an agreement and the market shall be informed accordingly. Proceeds from the disposal will be a hybrid of blue-chip equities and hard currency.
“The hard cash will be allocated to impact investments and value preservation assets with a currency hedge, which will help stimulate economic activity, generate foreign currency, and create jobs for the benefit of all Zimbabweans.”
In a statement released today, Nssa told its stakeholders: “Nssa enlisted the services of an independent financial advisor to ensure that the transaction was to the best financial interests of Nssa.
“The bids were evaluated from a technical and strategic fit followed by a financial evaluation and CBZ Holdings emerged as the most technically and financially sound bid.”
The transaction inked would be important for both CBZH and Nssa, the fund that takes care of retiring Zimbabweans.
It resonates with Nssa’s appetite to acquire prime stocks to help it protect its big membership from long-running threats to investments and savings that have been precipitated by an escalating economic crisis.
The present crisis is highlighted by currency volatilities and inflationary pressures.
For CBZH, prospects of a stronger relationship with a deep-pocketed investor gives it impetus to intervene in a variety of Zimbabwean sectors desperate for funding, especially in the aftermath of the Covid-19 pandemic, which has eroded disposable incomes and amplified de-industrialisation.
The manufacturing industry alone requires about US$2 billion to ramp up production and return to pre-crisis output levels.
The country’s biggest banking group is expected to play a big role in bankrolling the recovery effort.
This week’s transaction was a three-way deal, which saw Nssa selling off 31,22% of its shareholding in FMHL, another ZSE-listed blue-chip, to CBZ.
The pension fund, with an appetite to rule the boardrooms of the country’s cash-spinning gems, retained control with a 35% interest.
It means while CBZH gained a foothold in FMHL, it had to drop a few stocks to pave way for the aggressive Nssa entry into its ranks.
In a statement to shareholders released yesterday, CBZ Holdings said the parties had inked a deal although a series of conditions were still being addressed.
“Further to the cautionary statements issued on 30 May 2021, 28 July 2021, 1 September 2021, and 5 October 2021, the directors of CBZ Holdings Limited wish to advise shareholders that following the conclusion of negotiations, the company has now executed an agreement for the acquisition of 31,22% in First Mutual Holdings Limited from Nssa,” CBZ said.
“The agreement is subject to several conditions precedent which if fulfilled, and the transaction is successfully concluded may have a material effect on the price of the company’s securities,” the statement added.
But a well-placed executive close to the transaction told the Independent: “The amount involved in the transaction is significantly more than double the amount involved in the disposal of ZB Holdings, which was US$22 million.
“The largest shareholder sold 2% shareholding, as Nssa increased its interests, becoming the dominant player in CBZH by one or 2%. After the FMHL deal, Nssa also retained its spot as the biggest shareholder with 35%.”
Nssa is currently implementing a board and government-approved refocus strategy that involves divestiture, consolidation, and optimisation of its investments to unlock value for the benefit of its members, who include pensioners and contributors.
Nssa has also set its sights on investing in the region, where it hopes to diversify its portfolio.
This is expected to mitigate the risk of having all investments wiped out in the event of another economic and currency crisis similar to the one that affected the country between 2000 and 2008.
During the crisis, the Zimbabwean dollar collapsed after hyperinflation, which reached 500 billion percent in December 2008, almost triggered the collapse of Zimbabwe’s economy.
In the past few months, the same factors that led to the previous crisis have been returning, and fund managers, insurance companies and pension funds have been unsettled.
- See full interview with Manase: ‘We are refocusing our strategy’