The funding structure of insurance group Clientèle’s acquisition of licensed life micro-insurer Emerald Life has been amended, Clientèle said on Thursday.
The transaction, which was announced in November, initially was to have been settled through the issuing of preference shares to Investec Bank.
Clientèle said in a statement on Thursday that after engagement with the Prudential Authority, the funding structure of the acquisition had been amended. The parties had concluded an addendum to the agreement to take account of the revised funding structure, it said.
The acquisition would no longer be funded through the issue of the initial preference shares to Investec, but through a combination of free cash and Clientèle Life issuing preference shares to Investec subsidiary AEL Investment Holdings, for an aggregate subscription price of R570m.
The entire proceeds of the Clientèle Life preference shares would be used by Clientèle Life to advance a loan to Clientèle for R570m and Clientèle guaranteeing the obligations of Clientèle Life under the Clientèle Life preference shares, in terms of a subordinated guarantee, which may constitute the provision of financial assistance
Given that the initial preference shares would no longer be issued by the company to Investec, shareholder approval would be sought for a further amendment of the company’s memorandum of incorporation to decrease the authorised share capital by removing the initial preference shares, Clientèle said.
Shareholders would also be requested to approve the financial assistance and related resolutions relating to the approval of the new funding structure of the acquisition. Clientèle said it was in the process of preparing a circular to reflect the changes.
Business Day reported previously that Clientèle had ramped up its strategy of bulking up its mass market segment with the proposed acquisition of Emerald Life, shortly after it purchased 1Life.
“Emerald Life is a fast-growing licensed life micro-insurer and was established on the premise of supplying affordable funeral insurance products to the lower- to middle-income market segments via a national adviser distribution channel. Today, Emerald Life has a well-established footprint with over 18 branches nationwide and a head office in Bellville, Western Cape,” the company said at the time of announcing the acquisition.
Emerald Life has an established and experienced management team with 380 permanent employees and about 3,500 independent sales advisers, nationwide.
“The acquisition of Emerald Life will add to Clientèle’s expertise in the mass market segment and presents a number of strategic benefits for Clientèle. The acquisition is accretive for the Clientèle Group, which improves scale and will enhance future value creation for all customers, employees, shareholders and other stakeholders.”
Earlier in 2024 Clientèle completed the acquisition of 1Life, creating a group with 1.5-million policies with an estimated embedded value of nearly R8bn.
With Kabelo Khumalo
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