JSE-listed Rand Merchant Investment Holdings Limited (RMI) announced in a Sens update on Wednesday that the successful sale of its 30% stake in UK short-term insurer Hastings Group to Nordic insurance group Sampo, has seen it profit R8.7 billion.
The market reacted positively to news of the sale, with RMI’s share price jumping by as much as 9% since market open, to R45.99.
RMI sold its share of Hastings – which it jointly held with OUTsurance – to Sampo for R14.6 billion. The group acquired the stake in Hastings in December 2016.
RMI CEO Herman Bosman says that the company saw the sale of its part of the insurer as an opportunity to create value for RMI shareholders.
“The approach from Sampo was an opportunity to create value for our shareholders by monetising the investment in Hastings at an attractive premium, generating returns above our targets,” Bosman said.
“We have benefitted from Hastings’s sound operational performance and collaboration opportunities since our original investment in 2017 and enjoyed a successful partnership with Sampo more recently.”
RMI states that it will use the proceeds from the sale to settle its debt. This will see it achieving a debt-free capital structure after the implementation of the sale and the successful unbundling of Discovery and Momentum Metropolitan, announced in September.
According to the group, the sale will not have any impact on its (abovementioned) planned unbundling. Additionally, the success of the sale means that RMI will no longer pursue the rights issue which it was previously considering.
“It is anticipated that the unbundlings will proceed post receipt of the requisite regulatory approvals, which are well progressed and expected to occur in Q1 2022,” the group said.
The sale of RMI’s shares will also not jeopardise the hundreds of jobs that were created by Hastings’ previous ownership structure.
“The arrangement whereby OUTsurance manages a local call centre for Hastings will remain after the sale, protecting 650 permanent jobs in South Africa,” Bosman said.