(TALKZIMBABWE) TA in huge expansion deal

TA in huge expansion deal
Bloomberg
Mon, 13 Jul 2009 07:29:00 +0000

TA Holdings Ltd, a diversified investment company with strategic and portfolio investments in Zimbabwe and other parts of sub-Saharan Africa, will this month finalise a huge expansion deal in Uganda, which will make its subsidiary, Lion Assurance Uganda Limited, the largest insurance company in central Africa.

The group already holds 58,3 percent in the short-term insurer. Well-placed sources say TA has successfully applied for a composite license to diversify the operation into life assurance business, a strategic move that may see the investment realising its first underwriting profit this year.

Last year, underwriting loss increased 46 percent from Sh4,6 billion in 2007 to Sh6,7 billion the year before. "We are in the process of concluding a large expansion deal in Uganda.

We should be through by mid-July," Donald McDevitt, the chief operations officer for the group, said. "The deal will make us the largest insurance company in central Africa."

McDevitt said the company had already raised enough money to finance the expansion, which may also include an acquisition of an additional stake in the Kampala-based company. "We are cash-rich at the moment. Our cash balance is currently around US$11-12 million."

Recently, the company also acquired 85 percent of its local insurance operation, Zimnat Lion Insurance Company, after it successfully bought out minority holders through a share-to-share transfer.

After the take-over, Zimnat subsequently delisted from the Zimbabwe Stock Exchange (ZSE) on Monday last week. TA's strategic vision is to expand its insurance business to eight countries in sub-Saharan Africa, including Nigeria, by the end of the year and to 12 by 2012.

The transnational conglomerate has also acquired a 30 percent stake in the distribution arm of ZSE-listed PG Industries Ltd. "The deal has already been signed and we will be making an announcement in the next 10 days," McDevitt said, adding that the transaction was financed wholly from internal sources.

The Financial Gazette understands that the deal will buttress plans by the ZSE's fifth largest company by market capitalization to seize distribution opportunities in Botswana and Mozambique. Recent mining and construction expansion programmes in both countries have created a vibrant procurement and trans-industrial shipment market.

TA is also understood to be locked up in contract negotiations with its hotel partners in Ghana, Malawi and Zambia with a view to increase its stake in the hotels, which are owner-controlled but operated under the Cresta Hotels franchise. The company operates four Cresta hotels in Zimbabwe and two more in Botswana and South Africa.

Cresta Marakanlo Pty Limited in Botswana, rated sixth largest, is currently being refurbished by the Botswana Development Corporation, an upgrading which could see it scaling up in rank to number three.