Sovereign Wealth Fund eyes ZHL stake

THE Sovereign Wealth Fund of Zimbabwe is looking at acquiring a majority shareholding in diversified investment holding firm ZimRe Holdings Limited, Business Weekly has learnt.

The Sovereign Wealth Fund of Zimbabwe was established under Act [Chapter 22:20] (No. 7 of 2014) with the mandate of, among other things, making secure investments for the benefit and enjoyment of future generations of Zimbabweans.

The Fund is mandated to contribute to the revenues of Zimbabwe from the net returns on its investments in accordance with section 21.

It gets payment from a portion (not exceeding a quarter) of the royalties payable in accordance with Chapter VII (“Mining Royalties, Duty and Fees”) of the Finance Act [Chapter 23:04] in respect of more than seven minerals including, but not limited to gold, diamonds, nickel and others.

Moneys of the Fund not immediately required by the Board to fulfil the Fund’s objects may be invested in such a manner as the Board, with the approval of the Minister and if different the Minister responsible for finance considers appropriate.

With such a mandate, the Sovereign Wealth Fund is set to acquire Dayriver Corporation Limited, owned by Hamish Rudland alone or with others.

Dayriver Corporation Limited owns 33,81 in ZimRe Holdings Limited and is the major shareholder followed by the Government of Zimbabwe with 18,24 percent and NSSA with 15,24 percent.

ZimRe Holdings Limited operates through subsidiaries in general insurance, health insurance, reinsurance, life reassurance, reinsurance brokering and property services for private, commercial and corporate clients in Zimbabwe and overseas.

Some of the known brands under the ZHL stable include stakes in Fidelity Life Assurance of Zimbabwe Limited and Zimre Property Investments and Emeritus International Reinsurance Company Limited among others.

ZHL has strategic associates in CFI Holdings Limited (“CFI”) (28 percent), Diamond Seguros Mozambique, and Zimbabwe United Passenger Company (“ZUPCO”) among others.

There are also strategic investments in countries such as Zambia, Malawi, Mozambique, and Botswana.

The proposed transaction was revealed by the Competition and Tariff Commission of Zimbabwe on its Twitter handle on Thursday. “We are assessing the proposed acquisition of Dayriver Corporation Limited by Sovereign Wealth Fund.

“The merging parties operate in the insurance and reinsurance services, property management and agriculture sector,” reads the Tweet. The Competition and Tariff Commission which was established under the Competition Act [Chapter 14:28], has the twin mandates of implementing Zimbabwe’s competition policy and executing of the country’s trade tariffs policy, with the primary objective of enforcing the Competition Act [Chapter 14:28].

As part of its mandate, it can investigate, discourage and prevent restrictive practices and monopoly situations.

The CTC can approve mergers as is, or subject to certain conditions. It can also disapprove restrictive transactions.

Commenting on the proposed acquisition, Trigrams Investments analyst, Walter Mandeya, said the move is good in that ZHL is too strategic to be tightly held by a single shareholder.

He, however, said; “in principle, I think the Sovereign Wealth Fund has no business in investing in private companies”.

‘They should invest in greenfield projects, projects of national interest, and projects in which the risks for private investors would be too high.

“All this should be done with clear specific mandates and clear exit objectives,” Mandeya said.

“An example would be building a new dam that will have hydro and fisheries capabilities. The Sovereign Wealth Fund would invest, and recoup value through water rights, fishery licenses, etc., in perpetuity until exit objectives are met.

“A wealth fund is about creation of new wealth through prudent investment in the national resources and not getting involved in the musical chairs rearrangement of corporate set-ups. There is a need to guard against having the Sovereign Wealth Fund go down the Zamco route,” Mandeya said.

Through a representative, Rudland, said the deal was still on the negotiating table.

ZHL has also not issued any cautionary statement with regard to the potential change in major shareholders.

When contacted for comment Sovereign Wealth Fund chief executive, Kupukile Mlambo, who was appointed in December last, deferred to Finance and Economic Minister Mthuli Ncube.

“A board is yet to be constituted and until that is done, all communications are done by the minister (Minister Ncube),” he said.

Mthuli’s number was, however, not available by the time of going to print.