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Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
ASSUPOL LIFE LTD
Date SPI disclosed
May 27, 2011
Projected board date
June 30, 2011
Invested: October 2, 2012
Signed: June 5, 2012
Approved: August 4, 2011
Assupol Life Limited is an insurance company in South Africa with a long history in providing insurance products to the police force. In the late 80’s, it expanded its offering to all South Africans, particularly serving previously disadvantaged groups. Assupol’s products include life, disability and accident cover; funeral cover; retirements products; and savings and investment products. Approximately 90% of Assupol Life Limited’s 240,000 individual life policyholders are black, previously disadvantaged individuals. A large portion of these individuals are from lower income segments.
On 09 December 2010, Assupol was formally demutualized, thereby transforming from a mutual society to a stockholding company majority-owned by its policyholders. It is now known as Assupol Life Limited. The demutualization involved the creation of a holding company, namely Assupol Holdings Limited (“HoldCo”) that owns 100% of the life company, and has issued shares to policyholders and employees. In due course, Holdco will issue additional shares to new investors, including the IFC. In terms of the demutualization scheme a structured process is being implemented to assist the policy holders who became shareholders and who have not elected to retain their shares but to redeem their shares for cash. The redemption of shareholders would be made possible through the introduction of further strategic investors (other than IFC) over the next 18 months. Key to management strategy is to ensure that the company continues to be black empowered.
Through this project, Assupol Life Limited is looking to raise ZAR170 MM (equivalent to approx. $24.3 MM) of capital from IFC following the demutualization. IFC’s role in supporting this process is to: (i) lend credibility to the transformation of Assupol Life from a mutual society to a stockholder company; (ii) enhance Assupol Life’s reputation in the marketplace; and (iii) provide Assupol Life with capital to expand its reach in South Africa and also selectively explore opportunities in other parts of Africa.
Project sponsor and major shareholders of project company
Assupol Life Limited is a former mutual insurance company that had approximately 240,000 individual life policyholders. It in addition underwrites a large number of group scheme policies and products, giving it a national footprint in the Republic of South Africa. Following demutualization, the shareholding structure includes former policyholders (85%) and management and staff (15%).
Total project cost and amount and nature of IFC's investment
The proposed IFC is an equity investment of up to ZAR 170 million ($ 24.3 million) for a stake of up to 18% in the Holding Company of Assupol Life Limited post demutualization. IFC’s subscription will be in a proposed amount of up to ZAR 170 million or an amount such that IFC is not the single largest shareholder. Following the entry by other institutional investors for a stake of up to 25% in the HoldCo, Assupol Life Limited will proceed to a second subscription to bring its stake to the proposed amount of up to 18%.
IFC investment as approved by Board
20.93 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
Assupol is headquartered in Pretoria and has 16 other branches across South Africa as well as a fleet of mobile offices. Clients can access services throughout the country.
Anticipated development impact of the project
The project is expected to (i) expand the availability of insurance products (e.g. life, disability and accident cover, funeral cover, retirement policies and savings and investment products, etc.) to underserved populations in South Africa; (ii) highlight the potential of this market segment to other companies and the business model required to serve it; and (iii) increase the safety net protection for those who mostly need it.
IFC's expected development contribution
There is a strong role for IFC to play in bringing credibility to Assupol's transformation from a mutual to a stockholder company and also going forward as it prepares for a listing on the Johannesburg Stock Exchange (JSE) within 24 months of demutualization. IFC's additionality also lies in its ability to simultaneously bring to Assupol three important characteristics that it is looking for in like-minded investors namely: (i) strong support of Assupol's mission to serve disadvantaged populations; (ii) willingness and ability to enhance Assupol's reputation in the marketplace and (iii) willingness and ability to accompany Assupol's future expansion plans outside South Africa in the medium to long term.
Environmental and social issues - Category C
This project will support Assupol, a company providing insurance to individuals (life insurance, burial policies, student loan policies, retirement policies, property insurance) and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. The project will be required to demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions. No further review is required. The project is required to inform IFC in the event of any change in nature or scope of its present business or operations.
For inquiries about the project, contact:
Group Chief Executive Officer
P. O. Box 35900Menlo ParkPretoria0102 South Africa
Tel: (012) 366-3700Fax: (012) 741-4006
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Local access of project documentation
308 Brooks StreetMenlo ParkPretoria, South Africa