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FMHL to acquire Nicoz


FIRST Mutual Holdings Limited (FMHL) is set to acquire up to 80,92% of the issued share capital of short-term insurer, Nicoz Diamond Insurance Limited.


The acquisition requires FMHL shareholders’ approval at an extraordinary general meeting on August 31. The FMHL shareholders have to approve a proposed renounceable rights offer of 210 371 395 new FMHL shares to registered shareholders to raise $17,25 million to cater for the costs required to buy the Nicoz shares, as well as post transaction costs. The shareholders have to approve the proposed merger of the operations of Nicoz and Tristar Insurance Company Limited.

In a circular to shareholders yesterday, FMHL said it would first acquire 50,89% of Nicoz issued capital from the National Social Security Authority (NSSA).

It said NSSA had made an irrevocable undertaking to procure and deliver shares constituting 30,03% shareholding in Nicoz in exchange for 35 291 087 new FMHL shares. FMHL will make a mandatory offer to the remaining 19,08% Nicoz shareholders after the acquisition of the 80,92%.

FMHL said the proposed transaction was necessitated by that FMHL and Nicoz have a common controlling shareholder that is NSSA.

“The proposed acquisition will result in the merged entity enjoying all the benefits of having NSSA as an investor. NSSA will in turn benefit from consolidation of its investments in the short-term insurance sector through portfolio optimisation amongst other benefits,” FMHL said.

It said the economies of scale backed by a large capital base, technology and a wide delivery channel have become critical to operate sustainably in view of the low and deteriorating capacity utilisation in all economic sectors and increased cash outflows in the form of insurance claims, while there is limited new business.

In April, NSSA made a mandatory offer to Nicoz minority shareholders after its shareholding in the short-term insurer had exceeded the 35% threshold a single shareholder is supposed to hold in a listed entity.

This was after NSSA had shored its shareholding in Nicoz to 44,85%.

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