The proceeds of the deal will be used to pay off policy-holders who have decided not to take preference shares following the company's demutualisation at the end of 2010.
This is the second time in four months that Assupol has had capital flowing to it. In June the International Finance Corporation (IFC)‚ a member of the World Bank Group‚ invested R170m in Assupol in exchange for a 17% equity stake in the insurer. The proceeds were used to grow the business‚ settle inter-company loans and buy out policy-holders who did not want to be investors in the company.
The investments in Assupol are a sign that the insurer has been capital hungry after the demutualisation‚ making it a possible takeover target by a companies.
In June Assupol said it had more than 420‚000 individual policies in force and was growing its individual book by about 17% a year.
The new partner‚ Women's Development Businesses Investment Holding‚ is fully owned by a trust whose trustees are Zanele Mbeki‚ wife of former President Thabo Mbeki‚ Kalagadi Manganese chairman‚ Daphne Mashile-Nkosi‚ Colin Hall the former chairman of Woolworths Holdings and Michael Katz‚ the chairman of law firm Edward Nathan Sonnenbergs.
"The shares are acquired partly in cash and partly by way of a notionally funded black economic empowerment structure. Initially the holding will be 7% but as preference shareholders are redeemed the holding will increase to 10%‚" Assupol chief executive Rudolf Schmidt said.
Assupol Life was demutualised at the end of December 2010 and the company issued convertible preference shares to its qualifying policy-holders. Many of these shareholders have indicated that they do not wish to be shareholders and would prefer cash.
The shares were acquired for cash at a subscription price of about R2.35 each.
Currently policyholders own 63% of Assupol while employees and a share incentive trust holds 16%.
Asked how Women's Development Businesses Investment Holding was chosen as a partner‚ Schmidt said: "The organisation was identified from a list of potential partners. Assupol's focus is on the lower income segment and the core target market of the WDB offered exciting opportunities.
"WDBIH is renowned as an organisation with a proven track record of improving the lives of women in rural areas. The transaction with the WDB presents exciting opportunities for synergies with Assupol," he added.
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