Aflife to announce details of empowerment deal
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Financial Services Editor
AFRICAN Life will today announce details of a transaction that is likely to see the life assurer selling a 10% stake in its business to an empowerment partner.
The deal will bring Aflife close to meeting all the requirements of the Financial Sector Charter, well ahead of the 2010 deadline.
In December, Aflife said it was in talks to sell a 10% stake to empowerment players. On yesterday's closing price of R13,75, this would cost about R160m.
Analysts said yesterday that nobody stood out as a likely suitor for Aflife, although empowerment group Mvelaphanda Holdings has said it is looking at buying into an insurance business.
This would complement the 10% stake a Mvelaphanda-led consortium bought in Absa last month. It also owns 30% of Absa's asset manager, Abvest.
Empowerdex CEO Vuyo Jack said a deal with Mvelaphanda could create a conflict of interest due to Absa's relationship with Sanlam, although Aflife operates in a different market.
Aflife's current business is focused mainly on the lower end of the life market. Analysts said the right partner could increase its scope for new business.
Nedcor Securities insurance analyst David Barnes said a broad shareholder base would facilitate access into the largely untapped black middle-income market .
"My only concern is if you are looking at about 10% stake, in line with Financial Services Charter, it will reduce the free float which is only just over 50% at the moment," said Barnes.
Aflife is already tightly held. FirstRand subsidiary Momentum holds about a third of its stock.
"Obviously what we would hope to see is Momentum selling down some of its shares."
May 13 2004 07:14:37:000AM Stephen Gunnion Business Day 1st Edition
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