SPURRED on by the over-subscription in the Initial Public Offer (IPO), Fidelity Life Assurance Ltd’s share price went on an upward streak since listing last week as investors scurried for the scr
The IPO opened to the public a month ago when 48% of the issued shares were offered.
Of the $2 billion forecast to be raised, Fidelity’s IPO raked in $2,362 billion, 18% above forecast.
Fidelity’s share closed at 298 cents on the first day of trading and on Tuesday it had appreciated 84,5% to 550 cents.
Analysts say the Fidelity share was tightly held by institutional investors who were unlikely to sell.
“This has led to an increase in demand and ultimately the increase in share price,” an analyst said.
The largest institutional investor in the IPO had 172,7 million shares, which accounts for 24,72% while the minority investor with 1 500 shares accounts for 0,21%.
Managing director Simon Chapereka said the share price was set to rise.
“Our forecast is that it will trade at $10 after we release our half-year results,” he said.
Chapereka said with the bull run on the stock market, the scrip was set to move upwards.
He attributed the upward trend in the share price to the faith and confidence of investors .
Fidelity, Chapereka said, now has a task of delivering what it promised investors in the prospectus.
“The ball is now in our court to deliver…we are working on brochures for the UK market,” said Chapereka.
The Fidelity boss said the company was on an expansion programme which had seen the opening of a new branch in Kadoma and another one in Chiredzi soon.
Chapereka said Fidelity’s property manager is now in Chiredzi to negotiate with possible landlords for premises.
Until the listing last Monday, Fidelity was a wholly owned subsidiary of Zimre Holdings Ltd (ZHL).
ZHL now has 52% equity while the remaining 48% were taken by the IPO.
Fidelity’s listing on the bourse made it the fifth insurance counter to join the lucrative Zimbabwe Stock Exchange.
It became the third counter to join the bourse after brick moulding firm, Willdale in February and emerging telecommunications Celsys in April.
Formerly known as Legal and General of Rhodesia, the company was incorporated in Zimbabwe to inherit the business of a UK insurance company.
Having first operated in South Africa, the UK company opened a branch in Bulawayo in 1936 transacting both long and short-term insurance.
The year 1982 saw the company splitting into long and short-term assurance divisions.
In 1988 ZHL bought the long-term assurance division leading to the severing of ties with both South Africa and UK.
A year later, the company consequently changed its name to Fidelity Life Assurance of Zimbabwe (Pvt) Ltd.