Xylem acquires 72.05 per cent stake in Madison Financial Services Zambia for $35 million
The year 2020 was no doubt a difficult financial year for both the private and public sectors. Despite this, Madison Financial Services Plc remained a key financial services institution and one of the largest employers in the financial services sector in Zambia.
MFS is now poised to become an even bigger financial services Group following a transaction with XYLEM Trading (Pty) Limited in which Xylem will acquire 72.05% shares in MFS.
The transaction was facilitated by Lyco Business Solutions, a Business Advisory and Capital Raising Firm which is represented in Zambia, the region, Europe and the USA.
MFS is “a Zambian company deeply enshrined in securing the future of its clients and the stability of its employment environment, while seeking to maximize returns to all stakeholders.”
MFS was incorporated in 2007 by Lawrence Sikutwa and Associates Limited (LSA) to enable the International Finance Corporation (IFC), the private sector arm of the World Bank Group to invest in the financial services side of LSA.
The IFC took a 19.5% stake in MFS with LSA retaining 80.5%. MFS became the holding company to Madison General Insurance Company Limited (MGen), Madison Life Insurance Company Limited (MLife), Madison Finance Company Limited (MFinance), Madison Asset Management Company Limited (MAMCo), and MGen Tanzania Insurance Company Limited (MGenTZ). The MFS Group carries the household “Madison” brand.
MFS was publicly listed on the Lusaka Securities Exchange (LuSE) in 2014, a development which resulted in the exit of the IFC and the coming on board of ZFI Holdings (ZFI) Ltd of Mauritius to join LSA as the two largest shareholders in MFS with a combined stake of 72.05% in the MFS Group.
"This deal means that the MFS Group will maintain and greatly improve on its efficiencies, quality of products and innovation”. MFS current Group Executive Chairman Dr. Lawrence Sikutwa has said. "Our eyes were set on finding a lasting solution to the Group’s challenges including the MAMCo creditor problem. The key changing point for the Group’s turnaround lies in new capital investment to improve the performance of each of the Group companies. We are going into 2021 assured of a strong financial position that will add value to the overall performance of the Group”.
MFS is a diversified financial services group with the key components of SME finance, General and Life Insurance as well as Asset management, and an ability to expand to other avenues of the financial services business. The MFS business units complement each other to create synergies throughout the Group.
MFS has been an active market player through its established branch network across Zambia and employs a workforce of around 1,000.
MFS has recorded strong surpluses across many years. It is against this background that financial analysts in Zambia strongly believe that MFS has a sound lifespan necessitating continued support by both the private and public sectors.
Xylem found MFS a viable acquisition worth investing in as MFS already enjoys a market share that is stable with customer brand loyalty which is key.
At a time when many clients are realizing the value of insurance because the world’s economic climate is very uncertain mainly due to the COVID-19 Pandemic, MFS is going to provide services that will be designed with the best interests of its customers in mind, behind a backdrop of the national economic recovery program that is projected to stabilize the markets and achieve growth.
Xylem’s experienced team is eager to get to work on their investment in which they are confident of achieving significant financial returns which merit the multimillion US Dollar investment of $35million in the Group while seeking to inject additional fresh working capital to grow the MFS Group.
Xylem’s Chief Executive Officer, Kajiya Kantumoya says “Our philosophy is not to take-on opportunities that appear to be convenient but those which can add value. In MFS, we saw that we could add to Zambia’s economic growth and create more employment. As investors interested in the wholeness of the business rather than some business units only, we have already created strategies to push the Group to the higher status that it deserves with a leadership team that has unmatched success.
Xylem has great confidence in the Zambian economy and hence our investment in MFS which we shall grow further into a fully-fledged financial services group with influence to reckon with in the SADC region.
We take pride in what has been achieved by the outgoing major shareholders with the growth of MFS and we are poised for Xylem to take the Group to the next level of greatness."