Beritas Capital Limited, the new majority investor in Unity Kapital Assurance Plc, has launched a takeover bid to buy additional equity shares from the minority shareholders of the insurance firm.
A filing on the takeover bid obtained at the weekend indicated that Veritas Capital plans to acquire up to 693.33 million ordinary shares of 50 kobo each of UnityKapital from existing minority shareholders at a premium price of 77 kobo.
The plan is to acquire 5.0 per cent additional equity stake of UnityKapital, to bring the total majority equity stake of Veritas Capital to 55.3 per cent upon consummation of the acquisition process. The takeover’s price of 77 kobo represents a premium of 54 per cent on the current market value of UnityKapital Assurance, which like most insurance companies at the stock market, is currently trading at nominal value of 50 kobo per share.
Veritas Capital had won the bid to acquire the 50.3 per cent majority equity stake of Unity Bank Plc in UnityKapital Assurance. Following Central Bank of Nigeria (CBN)’s regulatory regime that required banks to either divest from non-core banking subsidiaries or form a holding company to hold those subsidiaries, Unity Bank opted to divest from its non-core banking businesses, including UnityKapital Assurance.
Veritas Capital and Unity Bank had earlier this year executed a Share Sale and Purchase Agreement (SSPA), detailing the terms and conditions of the acquisition of 50.3 per cent equity stake in UnityKapital Assurance. However, Securities & Exchange Commission (SEC) directed that a 30 per cent acquisition be done immediately while the balance of 20.3 per cent should be acquired simultaneously with a takeover bid to the other shareholders of UnityKapital Assurance.
In March 2016, a total of 4.16 billion shares of Unity Kapital Assurance were swapped in a cross deal at 77 kobo per share at the Nigerian Stock Exchange (NSE) to Veritas Capital. This represented 30 per cent equity stake in Unity Kapital Assurance.
The bid will run concurrently with the consummation of the transfer of the balance of 20.3 per cent equity stake to Veritas Capital, in line with the directive of SEC on the transaction. Capital Assets Limited, a leading capital market operator, is acting as the agent for the transaction.
Key extracts of the interim nine-month-report of UnityKapital Assurance for the period ended September 30, 2016 showed that turnover dropped from N2.29 billion in 2015 to N1.76 billion in 2016. Profit after tax also declined from N266 million to N171.7 million.
UnityKapital Assurance emerged in 2007 following the merger of three insurance companies with similar values. The merger followed the requirements of Insurance Regulation of September 2005 which required insurance companies to recapitalise to the level of N3 billion for non-life companies and N2 billion for life companies.