Old Mutual expected to endorse empowerment deal

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By Zimbabwe Investor on October 4, 2013. No Comments

HARARE — The Zimbabwean unit of global financial services group Old Mutual is expected to endorse the disposal of a 3.5% shareholding to a consortium led by the unit’s former CEO, Luke Ngwerume, for $13m at its annual general meeting on Tuesday next week.

OLD-MUTUAL-ZimbabweThe company said this was in pursuit of a bid to comply fully with Zimbabwe’s indigenisation laws, which compel foreign companies to cede majority stakes to black owners.

Other companies, including cement maker PPC, have already inked indigenisation compliance deals with the Zimbabwean government.

Old Mutual Zimbabwe’s disposal of 3.5% of its shares to a company led by its senior executives and directors is part of a broader indigenisation deal reached with former empowerment minister Saviour Kasukuwere on December 13 last year.

“Stiefel Investments entered into a sale of shares and relationship agreement with Old Mutual for the purchase of 3.5% of the fully paid up and issues B class shares,” Old Mutual Zimbabwe company secretary Laurence Karumazondo said on Wednesday.

“As envisaged and agreed at the time of the agreement with (Mr Kasukuwere), the transaction requires loan financing and is to be funded by the company through its banking subsidiary, Central African Building Society (CABS).”

CABS is a building society that also offers general banking services in the country.

It will offer a $12.756m loan facility to help facilitate the deal, at a 13% interest rate.

The loan had a tenure of 10 years, Mr Karumazondo said on Thursday.

Mr Ngwerume and Stiefel Investments will have to pay a 2% downpayment of $260,324.

Stiefel’s senior executives are among the executives and nonexecutive directors of Old Mutual Zimbabwe subsidiaries. They include Mr Ngwerume, who is now nonexecutive director of CABS; Todd Moyo, who is regional chairman for CABS in Midlands and Matabeleland; and Tracey Mutaviri, who is a nonexecutive director of Old Mutual Life Assurance Company in Zimbabwe.

In 2011, Old Mutual Zimbabwe agreed to offer pensioners on the group’s scheme a grant equivalent to a 10% stake in the company.

The empowerment deal also includes a stake of about 9% set aside for employees, in addition to Stiefel Investments’ 3.5%. – Business Day