Mandatory pension fund, the National Social Security Authority (NSSA)’s investment refocus strategy, which involves realignment and consolidation of the fund’s portfolio is expected to be completed by April, with several local and international players having responded to the authority’s call for proposals from those interested in acquiring its shares in three entities.
NSSA invited suiters through a statement that was released mid-January wherein it announced that it was offloading shares in First Mutual Holdings Limited (FMHL) and Turnall.
The compulsory pension fund also announced that it was looking for strategic partners for its wholly owned National Building Society (NBS).
With the deadline for submissions having elapsed last week, 20 players have successfully submitted their proposals.
NSSA CEO Arthur Manase said the response was very good as it indicated the market’s appreciation of the value that NSSA generates.
“We received 20 proposals for the three, broken down as follows, FML – seven, Turnall – six and NBS – seven. The responders were a mixture of institutional and private equity investors. The exciting thing is that all three entities quoted interest from both local and international suitors,” said Manase.
He said NSSA would enlist the services of an independent financial advisor to validate the bids and offer their recommendation, which would be escalated to the NSSA board for ratification.
“Of course, transactions of this nature will need to be approved by the various regulatory authorities, including the Reserve Bank of Zimbabwe, IPEC, the Securities Exchange, the Competitions and Tariffs Commission, among others. The public will be duly advised once the process has been completed, which we expect to be in April,” said the NSSA GM.
NSSA is currently implementing a refocus strategy that involves divesture, consolidation, and optimisation of its investments to unlock value for the benefit of its members who include pensioners and contributors.
Following requisite board approvals, the authority is offloading its entire 32.55% stake in Turnall as part of refocusing and optimising the investment portfolio.
NSSA is also in the process of implementing phase three of the insurance cluster consolidation strategy which involves reducing its stake in FMHL totalling 66.22% through offloading up to 31.22% to a strategic partner.
Said Manase:
“This strategic move will see NSSA keep a majority shareholding at 35%, in compliance with Zimbabwe Stock Exchange and IPEC requirements, while bringing in a strategic investor with solid financial resources, synergistic, technical, and strategic benefits to catapult First Mutual into a regional insurance powerhouse.
“NSSA has been non-compliant since 2012 and now intends to be a responsible corporate entity in line with its new values of transparency, honest and accountability. NSSA also needs to share its investment risk in line with good corporate governance.”
Phase one of the insurance cluster consolidation was initiated in 2017 and involved the merging of short-term insurer, NicozDiamond into FMHL through a disposal of NSSA’s stake in NicozDiamond in return for shares in FMHL. The transaction helped strengthen FMHL’s short term insurance business and solidify its market standing as one of the leading insurers in the country, said Manase.
The second phase, which was implemented late 2020, saw NSSA support the consolidation of Zimre Holdings Limited (“ZHL”)’s strategic business units – Fidelity and ZPI – through the disposal of NSSA’s shareholdings in Fidelity Life and ZPI in a share swap deal with ZHL.
This leaves NSSA’s insurance sector investments centred around FML and ZHL with vital cross linkages.
The banking sector consolidation saw the execution of the divesture from First Capital Bank (formerly Barclays) and ZBFH in 2020 as the first phase of the strategy. The second phase involves creating a strategic alliance for its investment in NBS.
Manase said NBS, had managed to establish itself as a significant player in the housing space, within five years and that “NSSA believes it is time to engage a strategic partner to broaden NBS’ product offering and enhance its capacity to deliver on affordable housing”.