First Mutual Life Seeks Shareholder Approval Ahead of Restructuring Exercise

First Mutual Holdings Limited (FMHL) is seeking shareholder approval for a restructuring exercise of the decades old insurance concern in a move which will see the two main units placed under a Botswana based holding company.

FMHL currently has two wholly owned reinsurance businesses, namely, First Mutual Reinsurance Company Limited (FMRE Zimbabwe) and FMRE Property & Casualty (Proprietary) Limited (FMRE Botswana), incorporated under the laws of Zimbabwe and Botswana, respectively.

A recent recapitalisation exercise has seen the Botswana based firm, Aleyo Capital acquiring a 29.1 % shareholding in FMHL re-insurance business for about US$5.3 million after a capital raising exercise and justifying the need for a restructuring exercise.

In a statement, FMHL Chairman Raymond Manzai said the two companies will be placed under a Botswana based holding company.

“The exercise involves the establishment of an already created holding company for the subsidiaries, namely First Mutual Reinsurance Holdings (Proprietary) Limited (“FMRE HoldCo”) which will own 100% of the two subsidiaries to be domiciled in Botswana by way of transfer of shares of the relevant subsidiaries with the ultimate beneficial ownership remaining the same,” he said.

The extraordinary General Meeting of the members of FMHL will be held virtually by electronic means on Monday 5 October 2020, at 1000 hours.

If the transaction is approved, FMRE HoldCo, which will be domiciled in Botswana is set to house its two re-insurance businesses.

FMRE Hold Co will be the parent firm for Zimbabwean based First Mutual Reinsurance Company Limited (FMRE Zimbabwe) and FMRE Property & Casualty (Proprietary) Limited which is in Botswana.

Manzani warned that if the transaction is not executed, First Mutual’s reinsurance businesses will remain sub-optimally capitalised and will not be able to take advantage of the opportunities in the reinsurance space.

Last year, the firm revealed that volatile risk factors associated with the Zimbabwean economy had prompted the strategy to pursue the Botswana direction.

Factors such as easy accessibility to foreign currency and conducive environment for business growth also influenced the strategy.

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