FINANCIAL juggernaut, CBZ Holdings (CBZ) is seeking regional expansion by leveraging on First Mutual Holdings Limited’s (FMHL) existing footprint in the region, as part of a plan to strengthen its balance sheet.
CBZ recently completed the acquisition of FMHL, which increased its shareholding to 36,35% in September 2023, and has since made a mandatory offer for the remaining shares.
FMHL, a local financial services firm, has a presence in countries like Botswana, Malawi and Mozambique through its various operations including insurance.
The FMHL acquisition was part of CBZ’s overall strategy to strengthen its balance sheet, which stood at US$1,35 billion last year.
CBZ group CEO Lawrence Nyazema told Standardbusiness that FMHL was important in the financial services giant’s strategy to penetrate the regional market.
“What FMHL does for us is it takes us into the region,” Nyazema said.
“So, we are not only interested in the Zimbabwe play. We are actually more interested in the regional play in that they are in Botswana, they are in Malawi, they are in Mozambique.
“So, that accelerates our entry into the region so that we don’t go into the region as a weak entity,” he said.
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“We go into the region on a stronger balance sheet with more product offerings so that our ability to survive in the region, where you have got much bigger institutions, can be assured.
“But, what we are also getting from FMHL is medical insurance, which we don’t have.
“We are also getting reinsurance. So, we are increasing our product range, and we are increasing our diversity.”
Nyazema said the transaction to acquire FMHL is being handled by the Competition and Tariff Commission (CTC) and they were expecting a response soon.
Should CTC approve the deal, the group is expected to sail through with its vision of regional expansion.
However, if the CTC response is negative, the paper understands that CBZ will still remain an institutional investor in FMHL.
“In fact, we expect a response from CTC in the next few days or weeks,” Nyazema said.
“If we get a positive response for us to go ahead with that transaction, we will go ahead with it.
“If we don’t get a positive response, we are still a significant shareholder in FMHL. It’s just below 35%.
“So, we can remain an institutional investor, and we will probably look at ways of doing business together that do not flout competition regulations.
“So that’s where we are in terms of FMHL.”
He added: “And what we are looking at, for FMHL, is to say, as CBZ, you’ll be aware that we are the largest bank in the country?
“Roughly 25% market share. When it comes to our insurance businesses, roughly we are around 5%, at best 10% market share.”
Nyazema said the size of the bank was not matched by the offering that they had on the insurance side.
He said the merger with FMHL which has considerable business in insurance would give CBZ a bigger insurance play.
“You will also be aware that FMHL is into property through FMP (First Mutual Properties, a FMHL subsidiary). We have got CBZ Properties,” Nyazema said.
“So, if those two come together, we have a more significant property business.
“So, what we are saying is how do we provide housing stock? How do we provide warehouses and factories that are required by the economy?
“So, we have banking, we have insurance, we have property, we also have investments, like Datvest. Datvest would probably be the second largest asset manager in the country.”
He said there was also an asset manager at FMHL.
“So, if we combine those businesses, our funds under management, we believe, will be at least half a billion US dollars,” Nyazema said.
He said this meant the group would be in a better position to intervene in the economy given a larger pool of funds at its disposal.
