Zimbabwe Stock Exchange-listed insurance concern Fidelity Life Assurance Zimbabwe has cancelled plans to raise fresh capital.The development comes on the heels of last week’s announcement by Zimre Holdings Limited (ZHL) that it had entered into an agreement with the National Social Security Authority (NSSA) for the purchase of its 35,09 percent stake in Fidelity Life.
ZHL already holds 20,57 percent of the life insurer and the acquisition will see it become the majority shareholder in the company with a 55,66 percent shareholdingThe Fidelity Life acquisition shares constitute 4,25 percent of the ZHL total issued ordinary shares.The share acquisition, which is subject to shareholder approval, will result in Fidelity becoming a subsidiary of Zimre and its operations being consolidated in the financial statements of the group.
The cancelled transaction, which Fidelity initially announced in July last year, would have involved the restructuring of the group’s capital structure through the issuance of shares by way of a rights offer.This means the new parent company is likely to inject new capital into the struggling company.
“The directors of Fidelity Life Assurance of Zimbabwe wish to advise all shareholders and the investing public that the company is no longer undertaking the rights offer as indicated in the previously published cautionary statements,” said company secretary Ms Chipo Matongo in a cautionary note to shareholders.
Fidelity operates three insurance businesses, Fidelity Life Assurance, Vanguard Life Assurance and Fidelity Funeral Services.It also has several other subsidiaries involved in the provision of microlending, medical aid, asset management and actuarial services.
It is also involved in property development.
Fidelity Life Assurance has been struggling for capitalisation as it reels under the strain of huge operating costs.