NZ Super Fund plans to take cornerstone stake in Fidelity Life
The New Zealand Superannuation Fund plans to take cornerstone stake of at least $100 million in Fidelity Life, the largest Kiwi-owned life insurer.
If the necessary conditions are met, including changes to Fidelity Life's constitution, the transaction would see the NZ Super Fund taking a minimum 41.1 percent stake in the insurer, they said in a joint statement.
Fidelity Life is privately held by more than 150 shareholders. The proposed investment is to be made up of $75 million of new shares issued to the NZ Super Fund at $115 per share and the acquisition of at least $25 million of existing shares. As part of the deal for existing shares, eligible minority shareholders will have the opportunity to sell some or all of their shares to the NZ Super Fund for $130 per share. This offer does not extend to the company's majority shareholders.
Fidelity Life's board recommends shareholders support the investment. Shareholders, including the Fidelity Family Trust, will vote on changes to the insurer's constitution needed for the proposal to proceed at the company's annual meeting on Dec. 12. The deal will settle if the constitution is altered and other conditions are me, they said.
The NZ Super Fund will acquire shares from the Fidelity Family Trust at $115 per share. The trust owns 55 percent of Fidelity.
Independent advisers Simmons Corporate Finance have concluded that the value of the Fidelity Life shares involved in the proposed transaction is in the range of $110-$130 per share and that the total value of the company is between $198 million and $220 million.
Fidelity Life chair Brian Blake said securing the NZ Super Fund as a major shareholder will provide new capital which will enable the company to accelerate its growth strategy. "Fidelity Life has experienced strong growth in recent years and this has outpaced our ability to fund the future rate of growth we're aiming for without additional capital," he said.
"This is a rare opportunity for the Fund to take a significant direct stake in a New Zealand life insurance company. The additional capital we are providing will support Fidelity's long-term growth plans," said NZ Super Fund chief investment officer Matt Whineray.