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Walter Muchinguri Assistant Business Editor
Zimbabwe largest reinsurer Zimre Holding’s rights offer to raise $15 million, to shore up its capitalisation levels and ensure growth of the business, was under-subscribed after shareholders took up 18,03 percent of the shares on offer. According to the reinsurer shareholders only subscribed 135 230 686 of the 750 million shares that were on offer. NMB Bank Limited, which underwrote the right offer will take up the remaining 614 769 314 shares representing 81,97 percent of the shares that were on offer.

The offer, which opened on February 2 and closed on February 20, was at a subscription price of $0,02 each to existing shareholders on a basis of one new ordinary share for every 1,041 ordinary share already held by existing shareholders registered as at January 30, 2015.

The new ordinary shares, which will be listed on the ZSE on March 2, will have equal ranking to all existing shares with effect from the date of issue.

The rights issue was expected to enhance liquidity and strengthen the reinsurer’s capital base and subsequently increase underwriting capacity and support business growth.

In addition the recapitalisation of the company was expected to enhance international credit ratings that are essential for business acquisition and support.

Zimre holding is also seeking to use the money from the rights issue to reposition its subsidiaries, both local and regional to be competitive in their respective markets.

The capital raising initiative was part of a three pronged initiative being employed by the reinsurer to turnaround its fortunes.

Apart from raising capital, Zimre is undertaking a cost optimisation and investment restructuring exercise. ZIMRE Holdings subsidiary, Baobab Reinsurance has already indicated that it is retrenching about 50 percent of its staff compliment.

The restructuring of its investment portfolio on the other hand is being achieved through the disposal of peripheral, non-core and non performing investments, in order to introduce liquidity in the core reinsurance operations. The reinsurance intends to sell off non-core assets to raise about $7 million.

In this regard Zimre Holdings has already sold its 49 percent stake in Malawi subsidiary, United General Insurance Company (UGIC), to its associate NicozDiamond for nearly $1,3 million. ZHL has interests in the insurance, reinsurance, life and pensions, property and agro-industrial sectors.

Apart from local operations, ZHL also has investments in Mozambique, Malawi, Zambia, South Africa, Uganda and Botswana.