Old Mutual, Provident Life Assurance Takeover Deal Sealed

 
By: Masahudu Ankiilu Kunateh
Email:[email protected]
 
Old Mutual, a leading South African financial firm, has closed a multimillion dollar purchasing agreement with the board and management of Ghana's Provident Life Assurance Company, following its acquisition of majority stake in the Ghanaian firm.

The deal has been approved by the Financial Services Board (FSB) of South Africa and National Insurance Commission of Ghana.

The Old Mutual, which acquired Provident Life Assurance Company, says the move was to increase its African presence.

Commenting on the mouth-watering deal, the Chief Executive Officer (CEO) of Old Mutual Emerging Markets, Ralph Mupita, said: 'With distribution in four cities in Ghana – Accra, Kumasi, Takoradi, and Tema – Provident Life Assurance Company provides excellent opportunities for Old Mutual, giving impetus to our expansion strategy in West Africa.'

Julian Roberts‚ Group Chief Executive‚ added: 'This transaction is another important step in our strategy of expanding our emerging markets businesses.'

Two senior officials of Old Mutual are in Accra, Ghana, to understudy the Ghanaian insurance industry, and also to prepare the ground for the official re-branding of Provident Life Assurance Company to Old Mutual early next year.

Now that the transaction has been finalised, Old Mutual is expected to make open, details of the transaction after 16 th November, 2013. 'We are currently in a close period, according to the two senior officials.'

Financial analysts say the close period is typically regarded as the one-month period preceding the release of a company's quarterly results, and the two-month period before the release of its annual results.

The close period is intended to prevent trading in a company's shares by its insiders ahead of the public dissemination of its financial results. This is, because, the insiders may be privy to information that was not yet in the public domain, and may be tempted to “jump the gun” with regard to their company's shareholdings.

In March this year, the Anglo-South African insurer, Old Mutual, which, last year bought the life insurance unit of Nigeria's Oceanic Bank, plans to buy minority and majority stakes in businesses in east and West Africa over the next three to five years.

The company, during the month of March, reported higher-than-expected profit.  It wanted to cash in on growing demand for insurance across the region, as rapid economic growth, fuelled in part by the natural resources boom, increases consumer spending.

'We believe that the prospects for growth in Africa are underpinned by sustainable, structural factors,' Old Mutual said, adding that the continent's economic output was forecast to have quadrupled to $2 trillion between 2000 and 2012.

Old Mutual, which owns insurance, banking, and fund management businesses across four continents, said adjusted operating profit for 2012, rose 18% to £1.6bn, narrowly beating the £1.57bn expected by analysts in a company poll.

Originating in South Africa in 1845, Old Mutual has been listed on the London and Johannesburg stock exchanges, among others, since 1999.

While Provident Life Assurance Company, whose headquarters is located at Provident Towers at the Kwame Nkrumah Circle in Accra, is the fifth largest life company in Ghana, and provides life insurance and investment products‚ mainly, via an agency force.