Shareholders to Vote on CFC Stanbic Demerger Plan

Jul 19, 2010 (Business Daily/All Africa Global Media via COMTEX) -- Shareholders of CfC Stanbic Holdings Ltd are set to vote on the separation of the firm's insurance and banking sections, a plan that is expected to give the business a more pointed strategy and create value from the listing of a new company.

The extraordinary shareholders meeting scheduled for August 9 will put to the ballot a raft of resolutions to kick-start the separation in a process known as a demerger.

Liberty Life, which is South Africa's third largest insurer and a subsidiary of Standard Bank, is expected to take up 56.82 per cent in CfCIH - an insurance firm merging Heritage Insurance Company Limited and CfC Life Assurance Limited.

Following the demerger and the eventual listing of CfC Insurance Holdings Ltd at the Nairobi Stock Exchange, investors will have an option to invest in either the listed insurance or banking business of the holding company.

In the last four months, CfC Stanbic has rallied by 91.9 per cent to stand at Sh82.50 in last week's trading as the bank's improved performance and news of the demerger filtered into the market.

Profits rise

Coming two years after South Africa's Standard Bank's local operation Stanbic Bank merged operations with CfC Bank, the bank's 151 per cent rise in profits points to its changing fortunes in a rebounding Kenyan economy.

Earnings stand at Sh563 million in the first quarter of this year.

An estimated 80 per cent of the group's business is in banking while the rest is in insurance, financial and investment advisory services.

Liberty Life which is South Africa's third largest insurer and a subsidiary of Standard Bank is expected to take up 56.82 per cent in CfCIH - an insurance firm merging Heritage Insurance Company Limited and CfC Life Assurance Limited.

The formation of CfCIH comes as a result of the separation of CfC Stanbic Holdings Ltd's banking and insurance businesses in a move aimed at strengthening the management focus in its business units.

Liberty Life's anchorage in CfCIH will provide the Standard Bank Group with an opportunity to drive bancassurance and insurance linked investment products while easing the management burden off CfC Stanbic Holdings' shoulders.

Following the restructuring, CfC Stanbic Holdings now has a 53.1 per cent stake in the insurance firm, African Liaison and Consultants Ltd holds 21.9 per cent and Liberty Life has a 24.9 per cent stake in the insurer.

Once regulatory approval is given, a demerger of the 53.1 per cent of CfC Stanbic Holdings will commence giving Liberty life 56.8 per cent ownership of CfCIH.

The demerger will be carried out 'in specie', a latin term used to indicate that distribution of an asset - in this case the shares held by CfC Stanbic Holdings- will be in its actual form, rather than transferring it into cash or another form.