HomeBusinessRenaissance declares FML strategic venture

Renaissance declares FML strategic venture

Dumisani Ndlela


RENAISSANCE Financial Holdings gave the clearest indication that it was in First Mutual Limited (FML) for the long haul, declaring the composite financial institution a “strategically significant investment” in financial results for the year to Decembe

r 31, 2005.

The development is likely to see the group nominating at least three directors to the FML board at its annual general meeting, a move analysts said was likely to see Renaissance, involved in an advisory capacity during FML’s successful demutualisation over three years ago, influencing the group’s direction.

“(Renaissance) made a strategically significant investment in First Mutual Limited, the holding company of a group of companies involved in the insurance and actuarial services sector. The investment is in line with the group’s long-term strategic plan,” Renaissance board chairman, Christopher Chetsanga, said in a statement accompanying the group’s financial results.

 “It is the group’s belief that FML is a well-managed and diverse group of companies with investments in most growth sectors of the economy and is expected to provide critical mass to RFHL (Renaissance),” Chetsanga said.

The group, whose banking arm had looked like a struggling horse after posting a disappointing $1,4 billion in after tax profit for the half year to June 30, 2005, pulled a surprise recovery to contribute significantly to the group’s bottom line.

The group posted an $82 billion after tax profit during the period under review, with Renaissance Merchant Bank contributing the bulk of the group’s income after registering an after tax profit of $70 billion, up 238% on an after tax profit of $13 billion recorded the previous year.

Other group companies trailed the bank in operating profits, with only Renaissance Capital recording a loss during the period under review.

The results did not include FML’s contribution to the group’s bottom line.

Renaissance also did not mark to market its investment in FML.

Had the group done so, its after tax profit could have surged to over $1 trillion during the period under review.

The dividend due to Renaissance for its 25% equity in FML could also have pushed profits well beyond the $250 billion mark during the year under review.

Chetsanga said the group’s merchant bank subsidiary was “well poised to achieve new capital requirements” imposed by the central bank under a new regime linking capital levels to the US dollar.

Merchant banking operations are expected to match their capital levels to US$7,5 million at the ruling exchange rates with effect from November 30, 2006.

The capital levels will always shift in line with exchange rate movements.

Recent Posts

Stories you will enjoy

Recommended reading