The Mercury

RMI buys stake in British insurer

Largest stake in Hastings

- Sandile Mchunu

FINANCIAL services investment holding company, Rand Merchant Investment Holdings (RMI), has acquired a 29.9 percent shareholdi­ng in UK-listed short-term insurer Hastings Group Holdings (Hastings) for an aggregate cash considerat­ion of between £487.3 million (R8.37 billion) and £499.5m.

If the transactio­n goes through RMI will become the single largest shareholde­r in Hastings after the acquisitio­n.

RMI will fund the acquisitio­n through a debt facility, which will be fully-underwritt­en by Rand Merchant Bank, a division of FirstRand Bank.

“The opportunit­y for collaborat­ion and shared learnings between our current insurance investment OUTsurance and Hastings is also a significan­t enhancemen­t to the overall investment propositio­n,” said Herman Bosman, the chief executive of RMI.

Hastings enhances the geographic diversific­ation of RMI’s portfolio into the large and competitiv­e UK short-term insurance market.

The acquisitio­n meets RMI’s goal of adding a significan­t traditiona­l financial services business in partnershi­p with a high quality and entreprene­urial management team as a fourth pillar alongside Discovery, MMI Holdings and OUTsurance Holdings.


“We are excited about this key next step in our evolution as Hastings fulfils both our strategy to expand and diversify our existing portfolio through the addition of a fourth pillar, while also being consistent with our investment mandate and style which focuses on high-quality companies offering long-term growth prospects,” he said.

This acquisitio­n is in line with RMI’s previously articulate­d strategy that in addition to its role as an active and value-adding shareholde­r to the existing portfolio companies, RMI intends to optimise, diversify and modernise the investment portfolio through the addition of investment­s across a broad spectrum of scale and lifecycles of financial services businesses.

The acquisitio­n is subject to regulatory approvals in South Africa, UK and Gibraltar.

It is anticipate­d that the transfer of the shares and payment of the acquisitio­n considerat­ion will occur in three tranches linked to the timing of the receipt of the specific regulatory approvals, namely from the three respective regulators.

The group said the final date for the acquisitio­n being effective was April 30.

RMI said the final acquisitio­n considerat­ion of between approximat­ely £487.3m and £499.5m would be determined with reference to a pre-agreed formula based on the timing of the completion of each tranche of the acquisitio­n.

Hastings commenced operations in 1997 and listed on the London Stock Exchange in 2015.

It is a fast-growing agile digital general insurance provider operating principall­y in the UK motor market.

It provides private car and other forms of personal insurance cover (home, van and bike).

As at the end of September 2016, Hastings had a 6.4 percent share of the UK private car insurance market and just fewer than 2.3 million live customer policies (LCPs).

It has grown LCPs by 17 percent compound annual growth rate (CAGR) over the last three financial years.

The group’s success in capturing market share has been combined with consistent­ly strong underwriti­ng performanc­e and growing retail profitabil­ity, with a CAGR of 21.5 percent in operating profit between 2012 and 2015.

The group has a market capitalisa­tion of £1.46bnn (as at December 13, 2016), employs 2 700 people and is headquarte­red in Bexhill-on-Sea with offices in Newmarket, Leicester and Gibraltar.


OUTsurance and Hastings have identified areas of potential collaborat­ion that may include the sharing of best practices and learnings between the businesses, as appropriat­e.

Hastings chief executive Gary Hoffman said: “We welcome RMI as a shareholde­r and look forward to working with Herman Bosman through his board role as we continue to execute on our attractive growth strategy.

“Given this experience, Hastings will look to explore potential areas of co-operation with RMI and OUTsurance in the future that would accelerate execution of our existing strategy, including in the areas of home, data analytics, mobile propositio­ns and operationa­l efficienci­es.”

 ??  ?? Hastings chief executive Gary Hoffman said: “We welcome RMI as a shareholde­r.”
Hastings chief executive Gary Hoffman said: “We welcome RMI as a shareholde­r.”

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