July 22, 2011 by Obinna Chima
Guaranty Trust Bank Plc (GTBank) has said it had concluded arrangements to divest from GT Assurance Plc (GTAssur), its insurance subsidiary.
The bank had agreed to sell its 67.68 per cent equity stake in the insurance firm, valued at N11.910 billion to Assur Africa Holding (AAH).
The move was in line with the new Central Bank of Nigeria (CBN) banking model.
A statement filed by the bank to both the management of the London Stock Exchange (LSE) and the Nigerian Stock Exchange (NSE), a copy of which was made available to THISDAY Thursday, however explained that completion of the deal was subject to regulatory approvals.
It said the transaction was expected to be concluded at the end of the third quarter of 2011.
GTAssurance was listed on the NSE on Friday, November 21, 2009. The management of the company had listed a total of 10 billion shares of the company at 50 kobo each at N3 per share.
The insurance firm is reputed as one of the most profitable companies in the Nigerian insurance industry. Its share price which stood at N1.43 per share as at close of trading at the stock exchange Thursday , however remained one of the most attractive in the sub-sector, considering the downturn and the unimpressive performance of the sub-sector.
AAH is a special purpose vehicle incorporated in Mauritius for the purpose of GTAssur acquisition. The shareholding structure of AAH is made up of six members, comprising three private equity funds with substantial investments across Africa.
They include - African Development Partners I, advised by Development Partners International (DPI) based in the United Kingdom, AfricInvest II LLC and AfricInvest Financial Sector Limited, both advised by AfricInvest Capital Partners (ACP) based in Tunisia and three international developmental finance institutions which includes DEG (Germany), Proparco (France) and FMO (Netherlands).
The acquisition is also being made in conjunction with a number of Nigerian investors.
Commenting on the deal, Managing Director/Chief Executive of GTBank, Mr. Segun Agbaje, said: "This is a critical milestone in the
implementation of our compliance plan with the new licensing regime of the CBN, on the back of shareholders' approval obtained at the Bank's Extra-ordinary General Meeting (EGM) held in October 2010."
On the selection of AAH as GTBank's preferred bidder, Agbaje affirmed that with the pedigree of the new buyer, the Bank was confident that AAH would continue to promote a culture of corporate governance in GTAssur that is consistent and compatible with best practice.
In addition, he stressed that AAH's robust post-acquisition plan for GTAssur as well as its support of the GTAssur management team and its strategy to profitably grow the business beyond the Bank's divestment contributed to its selection as the preferred bidder for GTBank's 67.68 per cent shareholding interest.
Agbaje said: "Over the last 7 years, GTBank has imparted on GTAssur our unique and enduring culture based on ethical and professional conduct as well as a high level of corporate governance, a legacy which has helped project the company from a marginal position (97th in market share) as at 2003 to a leadership position (fifth) by 2010.
In this regard, we are proud of our contribution to the development and deepening of the Nigerian insurance industry."
"This sale realises significant value for our shareholders. Together with the ongoing disposals of our other non-banking subsidiaries, it demonstrates clear delivery of our strategic focus of concentrating the Group's financial and management resources on our core business of commercial banking, with a view to enhancing our market positioning in the segments where we have strength and scale."