Africa First ReNaissance Corporation Limited (Afre) recapitalisation plans for its subsidiaries have hit a snag following the deferment of the group’s extraordinary general meeting (EGM) last month meant to give a nod to the proposed rights issue to raise $15 million.
The Zimbabwe Stock Exchange, Insurance and Pensions Commission and the Securities Commission of Zimbabwe cancelled the proposed EGM on the basis investigations into Afre’s dealings with Renaissance Financial Holdings Limited had not yet been completed.
The company had planned to float a $15 million right issue to shore up the performances of FMRE property and casualty Zimbabwe and FMRE property and casualty Botswana and Tristar Insurance.
Afre group chief executive officer Sibusisiwe Ndhlovu said: “The recapitalisation plans are on hold at the moment pending guidance from regulators. We continue to monitor each business unit and supporting it the best way possible, while we wait the regulator’s guidance to proceed with the rights offer.
“Currently, the board has not considered any other plans to raise capital, as we wait for the regulator’s guidance,” she said.
At the group’s analysts briefing in August Ndhlovu said Tristar was retaining 20% of its business and there was a need to beef up the balance sheet as it was falling short of the retention average for reinsurance, which is 54%.
Ndhlovu said the group is able to retain the market, but cannot take the business. So there is need to increase net retentions.
The funds raised through the rights offer are expected to be used for the restructuring of the group’s internal expensive debt.
During the first six months ended June 30 2011, Afre recorded a profit after tax of $4,6 million indicating a 165% jump from an after-tax loss of $7,2 million last year.
The group recorded a gross premium income of $42,9 million from $26,4 million same period last year while life assurance and medical savings business contributed $27 million.
Total assets for the group stood at $152 million from $130 million last year.