Hollard finally acquires Regent
Transaction now completed
THE HOLLARD Insurance Group yesterday announced that it had finally acquired Regent Insurance Group for R1.8 billion from JSE-listed company Imperial Holdings.
Hollard said it had been working on the deal with Imperial since September 2015.
The company said the transaction was formally completed after the Financial Services Board (FSB) and the Competition Tribunal gave it their blessing in April.
In January, Hollard acquired Regent’s non-South African interests in Botswana, Zambia and Lesotho for an upfront consideration of R697 million.
Hollard chief executive Nico Kohler said the transaction represented an important milestone for the company, given its objectives to increase its building scale in the country and footprint on the continent.
“The deal expands our life distribution capability and significantly enhances our presence and capability in the commercial vehicle space,” said Kohler, charging that the integration would strengthen Hollard’s position as South Africa’s largest independent insurance group, and result in a consolidated operation that employs more than 3 600 people and generates more than R20bn per year in premium income.
He added that the acquisition of Regent’s non-South African interests had already supported Hollard’s international growth, which now contributes more than 25 percent of the group’s profits and is enjoying growth of almost 30 percent per annum. Industry experts said the deal made sense for both companies.
Peter Takaendesa, portfolio manager at Mergence Investment Managers, said the disposal of the Regent Group was in line with Imperial’s strategy to focus on vehicle distribution and logistics.
Takaendesa said Hollard also needed the Regent business to reduce its relatively high gearing levels.
“The Regent Group has been a very profitable business for Imperial, but the final net exit price of R1.8bn is lower than the R2.3bn they had announced in September 2015.
“Regent is likely to benefit more from being part of Hollard, which specialises in insurance and financial services. The only challenge for Imperial will now be to find another asset that gives them returns that are as good as they have been receiving from Regent.”
Electus Fund Managers equity analyst Damon Buss said the sale represented Imperial chief executive Mark Lamberti’s decision to split the company into two focussed areas of logistics and Motus (automotive businesses).
Buss said Lamberti had consistently pursues the strategy since he took over.