Bulks up

It needed scale and has bought it

Finweek English Edition - - Insight -

DIS­COV­ERY’S AC­QUI­SI­TION of Bri­tain’s South­ern Life Health­care (SLH) is a deal the South African com­pany needed to hap­pen. With­out it, Dis­cov­ery – which has a six-year-old loss-mak­ing joint ven­ture with Bri­tish in­surance gi­ant Pru­den­tial – could have con­tin­ued plod­ding along for a year or more but would ul­ti­mately have had to with­draw from that mar­ket. It sim­ply wasn’t at­tain­ing the scale it re­quired or­gan­i­cally.

Still smart­ing from its with­drawal from the United States and the re­sul­tant R1bn write-down on its Destiny ven­ture, pulling out was sim­ply not an op­tion for Dis­cov­ery, which has built a R20bn busi­ness in South Africa in just a decade and a half. It needed a turbo boost in Bri­tain and is hop­ing the SLH deal will pro­vide it with the scale it re­quires to de­velop a de­cent bridge­head in a dif­fi­cult mar­ket dom­i­nated by two large in­de­pen­dents and, by South African stan­dards, a well-funded pub­lic health sys­tem.

It’s fund­ing the R1,56bn ac­qui­si­tion of the es­tab­lished, profitable health in­surer from lo­cal re­sources. The new en­tity will have a mem­ber­ship base of 700 000 and

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