South Africa's Discovery to raise $132 mln in new share issue
JOHANNESBURG, Nov 8 (Reuters) - South Africa's Discovery Ltd
said on Thursday it will issue about 10.9 million new
shares to qualifying investors in order to raise 1.85 billion
rand ($132 million) to help fund an acquisition of a stake and
assets in soon to be launched Discovery bank.
Discovery, which offers health, life and car insurance, was
granted a South African banking licence last year, but only on
condition that FirstRand sell its stake in a joint
venture that is currently mainly focused on Discovery-branded
In September both firms agreed that Discovery will purchase
FirstRand's 25.01 percent stake in Discovery Bank and the
remaining 25.01 percent economic interest that FirstRand
currently owns in the Discovery card joint venture.
The acquisition also involvea buying all rights to the
Discovery card book and related assets, which will be migrated
to Discovery over time.
In order to fund the acquisition, Discovery said on Thursday
it will issue new shares to qualifying investors to raise the
purchase price of 1.85 billion rand.
In a separate statement, bookrunners said the price guidance
will be between 160 rand and 162 rand per share.
Its largest shareholder Rand Merchant Insurance Holdings
Limited has indicated its intention to apply for 464 million
rand worth of placement shares, the firm said.
Certain directors of Discovery, which include founders
Adrian Gore and Barry Swartzberg and CEO of VitalityLife
Herschel Mayers, have committed to subscribe for 240 million
rand worth of shares.
"The subscription by the participating directors remains
subject to the approval of the necessary resolutions at the
annual general meeting of Discovery shareholders, scheduled for
26 November 2018," the firm said.
Rand Merchant Bank, a division of FirstRand Bank Limited and
Morgan Stanley & Co. International plc are acting as joint
bookrunners for the placement.
($1 = 14.0397 rand)
(Reporting by Nqobile Dludla; Editing by Elaine Hardcastle)
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