Africa-Press – Zimbabwe. DIVERSIFIED financial services group, ZimRe Holdings Limited (ZHL), will raise about US$40 million through the listing of its subsidiary on the Botswana Stock Exchange as it seeks to strengthen its balance sheet.
In 2023, ZHL combined its two Botswana reinsurance businesses after changes to the law enabled the unit to underwrite domestic business.
The two units, Emeritus Reinsurance Botswana and Emeritus Reinsurance International, were combined to form EmeritusRe International.
ZHL chief executive officer Stanley Kudenga told NewsDay Business that work on the listing of EmeritusRe International had begun.
“We’re looking at raising between US$30 million and US$40 million. Hopefully, in terms of milestones, much of the work will be done by the end of the year. We already have enlisted the services of financial advisers,” Kudenga said on the sidelines of the group’s annual general meeting on Thursday last week.
“So, work has already started on that transaction. Hopefully, before the end of this year, we will have a direction, but I’m sure by the end of the first quarter of next year.”
He said the key success factors for a reinsurance operation were its balance sheet, underwriting capacity and rating.
While those are mutually inclusive, he added, one needed to have a strong balance sheet to also get a good rating internationally.
“And you find that if you’re coming out of Zimbabwe, the world has moved ahead of us. While we’re having our challenges, the players out there are strengthening their balance sheet,” Kudenga said.
“So, you find that even some of the insurance companies we want to reinsure in the region have got stronger balance sheets than us as an insurer, which was eroded over time because of various factors.
“So, really for us to go back and become the biggest or one of the most significant players in Africa, we must have the balance sheet, which is what we need to do by raising capital in Botswana, where the rating as a country is higher than Zimbabwe.”
He said the certainty in terms of policies in Botswana gave the group assurance in the market going forward.
Kudenga said the group was also looking at balance sheet optimisation, revealing it was under pressure to give a good return on capital to the shareholders.
While strengthening focuses on stability and risk reduction, optimisation focuses on maximising value and returns.
The ZHL boss revealed the group’s balance sheet had become heavily structured on properties.
As of the end of last year, total assets stood at US$208,07 million, from US$182,04 million in the prior year.
As of 2024, the group’s property portfolio stood at US$87,02 million, an increase of nearly 16% from the prior year.
“But, you know, the rentals on properties are very limited. You can’t stretch it beyond 10% to 15%. For us to give a good return to shareholders, we now have to leverage those assets,” Kudenga said.
“And the biggest question is, what kind of innovation can you do to leverage those assets? Which is what we’re talking about. So, we want to optimise and leverage those assets to generate more returns for the group.”
As of March, ZHL reported its total assets grew 7% to US$223,04 million, from 2024, driven by net cash generated from operations.
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