Old Mutual approves $13m indigenisation loan

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HARARE – Old Mutual Zimbabwe Limited (OM)’s shareholders on Tuesday unanimously approved a $12,5 million loan to the group’s former chief executive Luke Ngwerume and associates to acquire a 3,5 percent stake in the company.

The move is part of the insurance giant’s efforts to comply with Zimbabwe’s indigenisation policy – compelling all foreign-owned firms to cede majority stakes to black locals.

Ngwerume and partners, Toddy Moyo and Tracey Mutaviri, will get the loan through their investment holding company Stiefel Investment (Private) Limited (Stiefel)as part of the indigenisation agreement entered between OM and government.

Moyo is the chairman of Central African Building Society (CABS) Midlands and Matabeleland Regional Board while Mutaviri is a non-executive director of Old Mutual Life Assurance Zimbabwe Limited.

Ngwerume, who spent 29 years working for OM, is now a non-executive director of the insurance company’s subsidiary CABS. He retired last year after seven years as chief executive.

Stiefel would get the funding in terms of the insurance group’s indigenisation plan agreed with outgoing Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere last year.

In 2011, OM agreed to offer pensioners on the group’s scheme a grant equivalent to a 10 percent stake in the company. The empowerment deal also includes a stake of about nine percent set aside for employees,
in addition to Stiefel Investments’ 3,5 percent.

“As envisaged and agreed at the time of agreement with the Minister, the transaction requires loan financing and is to be funded by the company through its subsidiary CABS.

The purchase consideration for the shares is $13 016 238 for 11 621 641 issued and fully paid up B Class shares at a price of $1,12 per share," OM said recently in a statement.

Zimbabwe’s biggest insurance and property development company said a total of $12,7 million would be funded by the company after Stiefel made a two percent down payment.

This comes as the diversified financial services provider’s earnings per share surged 265 percent to 25,80 cents in the half year to June 2013, up from 8,72 cents prior year.

Isaiah Mashinya, the group chief finance officer, said diversified revenue streams and a solid capital base helped OM to register strong profits in a depressed operating environment.

The Insurance giant’s profit after tax jumped to $86 million for the half year to June 2013 compared to $29 million recorded in the half year to June 2012.

“All our operations have excess liquidity over the minimum regulatory requirements and we did not get any borrowings except for the $15 million banking lines of credit,” he said.

In the period under review, the group’s revenue increased by 137 percent to $333 million from 140 million recorded in the previous comparable period.

Investment income contributed the biggest chunk to revenue chipping in with $221 million, net earned premiums contributed $70 million while banking income and fee income contributed $17 million and $20 million respectively.

OM total assets grew to $1,9 billion in the six months to June.

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