11 January 2013

Zimbabwe: Govt Reluctant to Offload Zimre Shares

GOVERNMENT'S plans to offload its entire stake in listed insurance group ZimRe Holdings Ltd (ZHL) could take slightly longer amid indications the state feels the company's share price is underpriced.

Speaking on behalf of government, State Enterprises and Parastatals minister Gorden Moyo confirmed the strategic move, saying offloading the shares now would be at a huge loss.

"We are not keen to offload simply because of the share price," Moyo said in an interview. "Our shares can't go for a song. If we are to offload now we can get about US$3million yet the investment was huge."

Analysts say ZHL is undervalued considering that its subsidiaries, Fidelity Life Assurance and Nicoz Diamond are trading at much higher prices.

"Generally no one is keen to give away assets so they (government) would rather wait," said an analyst.

Efforts to get a comment from ZHL group CEO Albert Nduna were fruitless.

There have been reports government's plans to divest from the insurance group are awaiting cabinet approval, as Zimbabwe moves to restructure all state- owned enterprises in line with the country's Medium Term Plan (MTP) economic priority targets between 2011 and 2015. Under the MTP reform, government identified 14 public enterprises such as Agribank, Air Zimbabwe, Tel One and Net One for restructuring under phase 1, which is still ongoing.

As reported in the First Annual Progress Report on the Implementation of the MTP, a memorandum on the proposal for the government of Zimbabwe to divest its 43,23% from ZHL is sitting with an Inter-ministerial Committee on Commercialisation and Privatisation of Parastatals (IMCCPP), which will deliberate on terms of the agreement before taking it to cabinet for approval.

Moyo told businessdigest after the report was released in November last year the ZHL restructuring could follow various models.

"We are looking at all possibilities, but for now I can't give youdetails of what ZHL together with the State Enterprises Restructuring Agency (Sera) have prepared," Moyo said, adding the IMCCP would sit down to debate the proposal in line with the country's Restructuring Procedures Manual.

Sera in April unveiled a Restructuring Procedures Manual which guides implementation procedure of commercialisation, privatisation and other restructuring procedures of parastatals.

Recently, Moyo said government had approved privatisation of its wholly owned People's Own Savings Bank, which will see a strategic partner acquiring 49% shareholding, as well as disposal of its entire stake in Grain Bag.

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