| Thu 12 Jun 2003, 14:52 | | Discovery To Raise R875 Million For Growth And Exp |
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Discovery to raise R875 million for growth and expansion plans
DISCOVERY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration : 1999/007789/06)
ISIN : ZAE000022331
Share Code : DSY
("Discovery")
Raised capital will fund Discovery Life and Destiny Health"s expansion plans
Johannesburg, 12 June - Discovery Holdings announced today that it will raise
R875 million through a rights issue to fund the future growth plans of its life
assurance subsidiary, Discovery Life, and US health subsidiary, Destiny Health.
FirstRand, Discovery"s largest shareholder, has given its full commitment to
fully underwrite the rights issue.
Discovery has grown organically over the last decade to it"s current position as
a focused risk insurer with two key lines of business, healthcare funding and
life assurance, managing annual inflows of over R10 billion. The current
embedded value of R3.6 billion has been generated on the basis of R176 million
capital invested. The additional capital to be raised will be used to fund
Discovery Life"s South African expansion and that of Destiny Health in the
United States (US).
According to chief executive of Discovery, Adrian Gore, Discovery Life is
actively building a new-generation life assurer that is and will make a
significant impact in the life assurance market. "Discovery Life has been built
on the foundation of product success, achieved through the separation of risk
and investment and a comprehensive range of unique benefits. The launch of the
Integrator last year enables clients of Discovery Life, Health and Vitality to
enjoy dynamic health management and significant reductions in life assurance
premiums. The combination of these products enables Discovery Life to meet our
clients" total risk needs", he said
Discovery Life"s product leadership has manifested in a rapidly growing share of
the market - approximately 25% of the new protection business written by
independent brokers is placed with Discovery Life. Discovery Life"s leadership
position was recently confirmed by the South African Financial Services
Intermediaries Association, which recognised Discovery Life as the "Individual
Life and Risk Assurer of the Year".
Discovery Life has grown to a value in excess of R1 billion today. This growth
is expected to continue, based on its product leadership, integrated product
offering and extensive distribution network. R650 million of the R875 million
raised will be used to fund this growth.
The balance of the capital raised, R225 million, will be deployed within
Discovery"s US subsidiary, Destiny Health. Destiny is the conduit for
Discovery"s unique Comprehensive Consumer Driven Healthcare model in the US.
"We believe that we can build Destiny Health into a viable business in the US
and ultimately the first mainstream US consumer-driven health plan. The capital
raised will be used to facilitate this expansion over the next two to three
years", Gore said.
Destiny is focusing on three key areas in order to achieve success, he said.
"Firstly, achieving break-even by January 2004 by carefully managing internal
costs and growing new business. Secondly, utilising the efficiency and scale of
our South African back-office to create structural competitiveness. Finally,
expansion through joint ventures with the highly rated Guardian Life Insurance
Company of America and Tufts Health Plan will provide Destiny with immediate
brand and financial credibility, a turnkey distribution footprint and access to
US health management expertise."
The capital raised will be used to fund Destiny"s current infrastructure and
marketing efforts in Illinois, expand through its joint ventures and restructure
its balance sheet with the advantage of reducing exposure to the US dollar.
Laurie Dippennaar, CEO of FirstRand Ltd, commented, "Discovery has produced
significant value utilising relatively low amounts of capital. FirstRand sees
significant opportunity in both Discovery Life and Destiny Health, and we are
committed to Discovery. Therefore we are underwriting the capital raising."
The last day of trade in Discovery shares in order to participate in the claw-
back offer is 27 June. The offer opens at 09:00 on 7 July and closes at 14:30 on
25 July. The new Discovery shares will be listed on the JSE Securities Exchange
on 21 July. The results of the offer will be announced and the new Discovery
shares issued on 28 July.
Ends
12 June
Issued on behalf of Discovery Holdings by Corporate Communications Consultants
For further details contact:
Adrian Gore - Chief Executive of Discovery
Tel: 011-529- 2854
Or
Rosemary Renton - Corporate Communications Consultants
Mobile: 082 491 0364
Date: 12/06/2003 02:32:04 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
