eBusiness Weekly
Golden Sibanda
The National Social Security Authority is confident it will close a deal with Zimre Holdings to acquire the latter’s 30 percent stake in NicozDiamond next week, setting the stage for consolidation of its investments in the insurance sector.
NSSA chairman Robin Vela said negotiations were ongoing, productive and straight forward and a final position on the matter could be sealed by next week, which would give the State institution circa 80 percent stake in the insurance company. He, however, stressed the point that NSSA would still proceed with the plans to consolidate its interests in the insurance industry, with or without the shareholding currently held by Zimre.
“We are in discussions with Zimre (for equity swap). For them, cash is not a clever option because of the way the economy is going. The discussions are going pretty well, they are productive and straight forward,” Vela said.
The remarks by Vela also came amid recent media reports the transaction could fall through, allegedly because Zimre had decided against selling its 30 percent stake in one of Zimbabwe’s most recognisable insurance brands. “The deal is not under threat,” Vela said in an interview with Business Weekly. “It is a normal transaction and we just need to find each other,” he said. However, the NSSA chairman said the State pensions authority would pursue its objective of consolidating the integration of NicozDiamond and its other wholly owned insurance investment, Tristar, to derive benefits of synergies.
“With or without ZHL, we will go forward with our objective . . . remember we own 51 percent of NicozDiamond, but right now we are in discussions with ZHL and there is nothing untoward about (ongoing negotiations),” Vela said.
This comes as First Mutual Holdings shareholders recently approved the life assurers acquisition of an 80 percent stake in NicozDiamond. It is expected that the acquisition of NicozDiamond will bring about economies of scale through the merger with Tristar Insurance and group shared services.
NSSA contends economies of scale backed by large capital base, technology and wide delivery channel had become critical for sustainability in view of the low and deteriorating capacity utilisation in all economic sectors and increased cash outflows in the form of insurance claims while there is limited new business.
