Zimbabwe Stock Exchange-listed entity Zimre Holdings Limited (ZHL), is looking at raising US$10 million at its subsidiary Emeritus Reinsurance, sources familiar with developments have revealed. ZHL is currently trading under a cautionary statement and has since advised its shareholders to trade its shares with caution.
“Further to the Cautionary Statement published on the 8th of June 2019, the Directors of ZimRe Holdings Limited (ZHL) wish to advise its shareholders and members of the public, that the company, is currently engaged in negotiations that involve a potential transaction at subsidiary level, that may have a material impact on the company’s share price.
“The directors, therefore, advise the shareholders of ZimRe Holdings Limited, and the public, to continue to exercise caution and to consult their professional advisors when dealing in the shares of the company,” reads the cautionary statement.
“They are looking at raising US$10 million offshore to recapitalise the regional operations,” said one-person familiar with the developments, asking not to be named.
The source said chances are that the US$10 million could be in exchange of equity in the subsidiary. Emeritus Reinsurance came out of a consolidation and restructuring of ZHL’s reinsurance operations.
At the time of restructuring, chairperson Ben Kumalo, said the new strategic thrust was to use the re-branded entity as a vehicle to mobilise international capital required to enhance credit ratings and advance the group’s footprint.
“The Emeritus International structure is expected to strengthen the market position of the reinsurance operations and position them for growth as well as allowing the operations to benefit from economies of scale and scope,” said Kumalo.
Zimre had to change the name of its regional operations to Emeritus Reinsurance after noting resentment in the old name in some regional markets.
“Most of our regional operations are under-capitalised so we are going to use Emeritus to raise off-shore and on-shore capital to fund them,” said Kumalo adding that Emeritus was a better vehicle to use than Zimre.
“The name Emeritus is not country specific unlike ZimRe, which people immediately associate with Zimbabwe and whatever bias or country risk they may associate with Zimbabwe.”
“We noted some resentment in some regional markets we operate in towards the name ZimRe, in some cases due to nationalistic sentiments and also because of the sanctions burden. We have decided to nurture and exploit the Emeritus brand,” said Kumalo adding that the company is considering eventually re-branding all its regional operations under the Emeritus brand.