Nssa raises RTG stake to 60pc

HARARE - First Mutual Holdings Limited (FMHL) yesterday announced that it had sold its shareholding in hotel concern, Rainbow Tourism Group (RTG), to its major shareholder, the National Social Security Authority (Nssa).

The deal will give the compulsory pensions group absolute control in the hotel operations, which has been ravaged by shareholder bickering for many years involving British tycoon, Nicholas van Hoogstraten.

Nssa already owns 40 percent shareholding in RTG.

The 19,95 shareholding purchased from FMHL will raise its interest in the hotel chain to 60 percent, giving it an overwhelming majority to sway board decisions and shareholder resolutions.

The transaction apparently means that the insurance-focused group has snubbed the British mogul, who was also interested in the stake.

Nssa has also been involved in a shareholder brawl with van Hoogstraten in agro-focused group, CFI Holdings.

In an announcement to shareholders, FMHL said an agreement had been reached between itself and Nssa for the acquisition of FMHL’s entire shareholding in RTG, subject to unspecified terms and conditions.

“The agreement to dispose of 19,95 percent shareholding in RTG was reached in August 2017 and subsequent approvals were obtained.

“The disposal is in terms of the corrective order issued by Ipec (Insurance and Pensions Commission) in 2012 and this investment had been classified as held for sale by FMHL since December 2015,” said FMHL in its announcement.

FMHL had last year offered the shareholding to van Hoogstraten, who already controls about 36 percent shareholding in RTG.

Last month, FMHL chief executive officer, Douglas Hoto, had disclosed that they were “in discussions with some investors” for the RTG shareholding but refused to give details or divulge the identity of the suitor due to confidential clauses.

The group — whose subsidiaries include First Mutual Wealth, First Mutual Health, Pearl Properties, First Mutual Life and Tristar Insurance — believes its shareholding in RTG carries an estimated value of over $3,5 million.

FMHL had taken the decision to sell its RTG shares after Ipec issued a corrective order advising it to concentrate on its core insurance business and general financial services.

RTG recently indicated that its businesses had stabilised, and that it expected to register significant growth in the 2017 financial year.

In financial results released this week, RTG reported a reduction in its loss position for the six months to June 30, 2017 $2,9 million reported in the corresponding period in prior year to $290 451 during the reporting period.

Revenue had marginally increased by two percent to $11,6 million to $11,4 million reported in the same period in 2016 after a strong performance from hotels outside Harare.

Tendai Madzivanyika, the RTG CEO, said the business had been weighed down by Harare hotels during the period.

“Our hotels outside Harare produced a strong performance during the reviewed period. But, Harare hotels weighed the group down,” said Madzivanyika.

Hotels outside Harare recorded a 13 percent growth to $7,1 million during the period under review, from $6,3 million during the same period the previous year.

There were plans for RTG to embark on a rights issue to raise $25 million in June, but these were foiled by lack of consensus between shareholders.

Part of the proceeds were expected to be deployed towards settling a $13,6 million loan from Nssa.

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