The behemoth financial services group, Botswana Insurance Holding Limited (BIHL), has announced significant acquisitions in Nico Holdings Limited, a Malawian company, and, indirectly, some stake in the Botswana Insurance Company. (BIC)
BIHL, which subsidiaries include Botswana Insurance Fund Management (BIFM), Legal Guard and Botswana Life, said as part of its overall strategy to broaden its ability to offer a wide range of financial services and in exploring ways of adding value to the shareholder, will acquire 25.1 percent of the issued ordinary shares of Nico Holdings from Sanlam Emerging Markets. (SEM)
The transaction will see P146 million exchange hands after necessary approvals have been obtained. SEM is a South African financial services company which is a 100% subsidiary of Sanlam Limited, a listed company on the Johannesburg Stock Exchange. SEM owns 25.1 percent in Nico and 58.3 percent of the share capital in BIHL, thus this, according to the statement from the BIHL, makes the deal a related party transaction (Where parties on both sides have a common interest or relationship.) As a result, the transaction requires approval of BIHL shareholders and may require other regulatory approvals including the approvals required in terms of the Malawian Stock Exchange. (MSE)
Nico is a (MSE) quoted financial services provider which plies its trade in general insurance, life insurance and pensions, banking, asset management, information technology and investment holding. It operates in five countries; Malawi, Tanzania, Uganda, Zambia, and Mozambique. It has a market value of 31.3 billion Malawian Kwacha (About P600 million).
The BIHL board, commenting on the opportunities presented by the transaction, said Nico’s business is well diversified into a number of financial services spanning over five countries in Southern Africa. “It further offers BIHL an opportunity to expand into Southern Africa at a market related price with attractive growth opportunities and enhanced return on group equity value,” said the BIHL board.
BIHL will also, indirectly acquire stake in BIC, the market share leader and oldest short term insurer in Botswana for a total of P82.6 million. “BIHL is considering a series of proposed transactions which will result in it acquiring up to 50 percent of the issued share capital of Teledimo Proprietary Limited. Teledimo directly owns 50 percent of the shares in BIC. The first of these transactions is acquisition of the 23.33 percent stake in Teledimo currently held by 21st Century Proprietary Limited, and the 10 percent stake in Teledimo held by Tantamoga Investments Proprietary Limited,” read the statement, adding that transactions will be implemented to increase the acquisition up to 50 percent. The board highlighted that the first transaction was subject to competition approval, the application which it would submit.
The benefits of the transaction, according to the board, is that it will allow BIHL and BIC to enhance their product offering and the ability to cross sell with a view of creating greater value for the shareholder.