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Acquisition of a majority shareholding in Metropolitan Life Swaziland Limited
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000163382
(“Vunani”)
ACQUISITION OF A MAJORITY SHAREHOLDING IN METROPOLITAN LIFE SWAZILAND LIMITED
1. BACKGROUND INFORMATION
Vunani is pleased to announce that an agreement (“the Agreement”) has been
concluded between Telos Proprietary Limited (“Telos” or “the Purchaser”),
Metropolitan International Holdings Proprietary Limited (“the Seller”), and
Metropolitan Life Swaziland Limited (“MetLife Swaziland”) on Friday, 22 February
2019 in terms of which Telos shall acquire 67% of the shares (“the Sale Shares”)
of MetLife Swaziland from the Seller, subject to regulatory approval. for a
total purchase consideration of R55 million (“Purchase Consideration”) (“the
Transaction”).
Telos is owned 77.6% by Vunani Capital (Proprietary) Limited, a wholly owned
subsidiary of Vunani and 22.4% by the senior management of MetLife Swaziland
(“Management”) as detailed in paragraph 4 below. The Seller is a subsidiary of
MMI Holdings Limited (“MMI”).
The Transaction will result in Vunani and Management jointly acquiring the Sale
Shares to own 67% of the ordinary shares of MetLife Swaziland. The remaining
balance of 33% of the ordinary shares of MetLife Swaziland will continue to be
held by Eswatini Development and Savings Bank (“Eswatini Bank”), which originally
invested in MetLife Swaziland in 2010.
The Transaction is in line with Vunani’s strategy to expand its financial
services activities, especially in niche markets, both in South Africa and across
the continent with a focus currently on the South African Development Community
countries.
The Agreement contains legal warranties and indemnities which are considered
normal in respect of a transaction of this nature and is still subject to
regulatory approval.
2. THE BUSINESS CONDUCTED BY METLIFE SWAZILAND
MetLife Swaziland is an insurance company and has provided both long-term and
short-term insurance products, solely in Eswatini (Swaziland), since 2008.
MetLife Swaziland and its wholly owned subsidiary, Momentum Insurance Swaziland
Limited (“MIS”) – also founded in 2008 - were merged in 2012. MetLife Swaziland
offers long-term life products while MIS offers short-term insurance products.
Long-term life products include group life assurance products, group funeral
products, group disability products as well as the administration of retirement
savings products. Short-term products include car insurance, household insurance,
health insurance (both in-hospital cover and medical savings accounts) and short-
term commercial insurance for businesses.
The Seller has granted MetLife Swaziland and MIS the right to use the
Metropolitan/Momentum brand names on an interim, non-exclusive, non-transferable
basis for a period of three calendar months from the Effective Date. A rebranding
exercise will be undertaken and implemented during this period.
3. RATIONALE FOR THE TRANSACTION
The Transaction is being undertaken for the following reasons:
3.1 The Transaction is in line with Vunani’s diversification strategy to
focus on growing and expanding its financial services activities, in
niche market opportunities, both in South Africa and on the continent,
especially in the SADC region;
3.2 Vunani has established financial services operations in Zimbabwe,
Malawi and Zambia. The acquisition of MetLife Swaziland will further
expand Vunani’s SADC regional presence while adding further depth in
the insurance sector in partnership with its local, long-standing and
experienced management;
3.3 MetLife Swaziland and MIS both boast large percentages of annuity
revenue, proven strong cash generation capability, and a high quality,
diversified client base; and
3.4 MetLife Swaziland and MIS are market leaders in their regional industry
and with management acquiring a significant shareholding in MetLife
Swaziland, continuity is ensured.
4. MANAGEMENT
4.1 The core senior management team have been with MetLife Swaziland since
inception and comprises of David Takis (chief executive officer),
Charles Bethel (head of implementation), Njabulo Dlamini (chief
financial officer), Fatima Henwood (head of client engagement, Rose
Hamilton (human resources business partner)and Samkelo Ginindza
(Pricing and Actuarial Specialist).
4.2 MetLife Swaziland management have more than 90 years of combined
financial services sector experience.
5. PURCHASE CONSIDERATION
5.1 The Purchase Consideration for the Sale Shares shall be an amount of
R55 000 000.00 (fifty-five million rand), subject to an adjustment in
accordance with the provisions of paragraph 5.2 below.
5.2 The Purchase Price shall be payable as follows –
5.2.1 R35 000 000.00 (thirty-five million rand) (“Upfront Amount”) shall
be payable within 5 (five) business days after the date on which
the last of the suspensive conditions are fulfilled or waived and a
fulfilment letter has been signed and issued by the Seller;
(“Fulfilment Date”); and
5.2.2 the balance of R20 000 000.00 (twenty million rand) (“Deferred
Amount”) shall be payable within 5 (five) business days after the
expiry of a 6 (six) month period calculated from 5 (five) business
days after the Fulfilment Date (“Effective Date”).
6. FUNDING OF THE TRANSACTION
Vunani has umbrella facilities with its commercial banker to draw on for purposes
of the Transaction. The terms of such facilities are considered market-related
for a transaction of this nature.
7. EFFECTIVE DATE
The Effective Date of the Transaction will be 5 (five) business days after the
Fulfilment Date.
8. NET ASSETS AND PROFITS OF METLIFE SWAZILAND AND MIS
The value of the net assets of MetLife Swaziland and MIS, which are the subject
of the Transaction, for the six months ended 31 December 2018 was R84 278 226.
The profit after tax attributable to the net assets that are the subject of the
Transaction for the six months ended 31 December 2018 was R8 515 517.
The value of the net assets of MetLife Swaziland and MIS and the profit after tax
attributable to such net assets has been extracted from the unaudited management
accounts of MetLife Swaziland and MIS for the six months ended 31 December 2018.
Vunani is satisfied with the quality of the management accounts for both MetLife
Swaziland and MIS.
9. SUSPENSIVE CONDITIONS
The Transaction is subject to, inter alia, the fulfilment or waiver of the
following Suspensive Conditions by no later than 31 March 2019 (“Long Stop
Date”) -:
9.1 the receipt by the Seller from the Purchaser of the approval of the
Transaction by the Eswatini Financial Services Regulatory Authority and
Competition Commission;
9.2 the receipt by the Seller from the Purchaser of any and all third party
statutory and regulatory approvals and requirements as may be necessary in
order to implement the Transaction;
9.3 the Seller delivering to the Purchaser a waiver of pre-emptive rights from
Eswatini Bank in terms of the Transaction;
9.4 the Seller and the Purchaser providing MetLife Swaziland with the requisite
resolutions required for duly approving the Transaction; and
9.5 the Parties entering into a Transition Services Agreement which sets out in
detail the terms of the transition services which are required to be
provided by the Seller and/or a MMI group company, to MetLife Swaziland for
a limited transitional period, and the related fees to be charged by the
Seller and/or a MMI group company for these services.
10. ARTICLES AND MEMORANDUM OF ASSOCIATION
Vunani undertakes that the articles and memorandum of association of MetLife
Swaziland and MIS will conform to Schedule 10 of the JSE Listings Requirements,
as required.
11. CLASSIFICATION OF THE TRANSACTION
The Transaction is classified as a Category 2 transaction in terms of the Listing
Requirements of the JSE Limited. The Transaction is therefore not subject to
Vunani shareholder approval.
Sandton
26 February 2019
Corporate Adviser to Vunani
Vunani Corporate Finance
Designated Adviser to Vunani
Grindrod Bank Limited
Corporate Adviser to MMI
Deloitte Capital (Pty) Ltd
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