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Disposal of Stangen
AFRICAN PHOENIX INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1946/021193/06)
Ordinary share code: AXL ISIN: ZAE000221370
(“African Phoenix” or “the Company”)
DISPOSAL OF STANGEN
1. INTRODUCTION
The board of directors of African Phoenix (“Board”) is pleased to advise shareholders that, further to
previously published statements notifying shareholders that it has been exploring a number of strategic
options in relation to its investment in The Standard General Insurance Company Limited (“Stangen”), the
Company has entered into a sale and purchase agreement (“Agreement”) for the sale of its 100% holding
in Stangen to King Price Financial Services Proprietary Limited (“King Price”), for the sale consideration
detailed in paragraph 2.2 below (“Disposal”).
2. THE DISPOSAL
2.1 Nature of the business of Stangen and rationale for the Disposal
Stangen provides a range of quality, personalised and affordable insurance products in the retail
market. Stangen is licensed to sell assistance (funeral), life, disability, health and retrenchment
insurance.
In terms of the revised Investment Policy contained in the circular distributed to shareholders on
18 February 2019 (“Circular”) which set out the Company’s principal objectives, investment strategy
and policy (including investment objectives, investment focus and investment parameters), and which
was approved by shareholders at the general meeting on 20 March 2019, it became apparent to the
Board that in applying such criteria to the Stangen business plan, Stangen requires a strategic partner
that can facilitate access to broader distribution channels and customer bases in order for it to achieve
faster growth within the financial services industry in South Africa, and help to support its new business
funding requirements. The Board is of the view that Stangen’s strong management team and life
insurance expertise combined with the larger King Price distribution platforms and general insurance
experience can assist Stangen to achieve its required scale quickly and more efficiently.
King Price is widely held by various parties (including Mergon Foundation NPC and Misty Sea Trading
324 Proprietary Limited), and owns 100% of King Price Insurance Company Limited, an authorised
financial services provider and short-term insurer.
2.2 Sale consideration
The final sale consideration in respect of the Disposal will be based on Stangen’s audited Net Asset
Value (“NAV)”) as at 30 September 2019. As at 31 March 2019, Stangen’s NAV, as set out in the
Company’s reviewed condensed consolidated interims financial results for the six-month period ended
31 March 2019 (“Interims”), was R527.6 million.
Given that African Phoenix expects, subject to the approval of the Stangen board of directors, to receive
a dividend of approximately R380 million prior to 30 September 2019, and as Stangen is currently
utilising cash reserves, it is anticipated that the Stangen NAV on which the final sale consideration in
respect of the Disposal will be based will be approximately R140 million.
2.3 Conditions precedent to the Disposal and effective date
The effective date of the Disposal is anticipated to be 1 October 2019 provided that all conditions
precedent to the Disposal have been fulfilled by 30 September 2019, which conditions precedent
include:
Phoenix Investment disposal v9 280619 Clean
2.3.1 regulatory approvals, including approvals by the Competition Authorities and the Financial
Services Authorities; and
2.3.2 the declaration of a dividend to African Phoenix before 30 September 2019.
The Agreement contains warranties which are usual for a transaction of this nature.
2.4 Application of the proceeds of the Disposal
The net proceeds of the Disposal will be applied in line with the Company’s objective of enhancing
long-term shareholder value as measured by consistent growth in net asset value per share.
3. FINANCIAL INFORMATION
The value of the net assets of Stangen as at 31 March 2019 was R527.6 million. The loss before tax
attributable to Stangen for the six months ended 31 March 2019 was R15.9 million. The audited profit
after tax attributable to Stangen for the year ended 30 September 2018 was R45.8 million.
The financial statements were prepared in accordance with International Financial Reporting Standards
and the Companies Act, 2008 (Act 71 of 2008), as amended.
4. CATEGORISATION OF THE DISPOSAL
Given that the Disposal has been concluded in the ordinary course of business pursuant to the
aforementioned Investment Policy, section 9 of the Listings Requirements does not apply. However,
as the Disposal, which has been categorised, exceeds 10%, it has been announced pursuant to the
provision of section 9 of the Listings Requirements.
Johannesburg
28 June 2019
Sponsor
Merchantec Capital
Legal Adviser
Webber Wentzel
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