Assupol Life, originally founded in 1913, celebrated as the North Gauteng High Court ruled in favour of the application by Assupol Life to demutualise. The decision sets in motion the restructuring of the group into a holding Company (Assupol Holdings Limited) and two operating businesses, namely Assupol Life Limited and Assupol Investments (Pty) Limited, and paves the way for a primary listing of Assupol Holdings on the Johannesburg Securities Exchange (JSE) within the next twenty-four months. It will also make Assupol one of the very few black-owned insurance companies in South Africa.
COVER spoke to Rudi Schmidt, CEO of the Assupol Group just after the ruling. According to him, they were delighted with the positive news. “This is not only a milestone in the history of Assupol, but also a significant step towards its future. The hard work of the Assupol Life team and its advisors, Webber Wentzel Attorneys, during the last few months has finally paid off.” He added that this paves the way to place more than half a billion rand, in the form of over 400 million shares, in the hands of policyholders of Assupol Life. He explained that, besides the allocation of free shares to qualifying policyholders of Assupol Life, the demutualisation scheme also provides for the creation of a community trust which will uplift and support the communities where large concentrations of Assupol policyholders reside.
Assupol decided on the demutualization route in 2000 after it realized that the partnership route as a means of growth is not appropriate. The first step was to get the company CAR up to ensure approval for the demutualisation process. With a CAR of 1,7 at the time of the application, the stage was set for approval. The demutualisation process started in May 2010, with a formal notification to the Financial Services Board. As part of the process, Assupol Life had to comply with various statutory requirements, including those from the Financial Services Board. Such statutory requirements included communication with its policyholders and ultimately a High Court application.
Once the process started, it took approximately two years. According to Rudi, the Financial Services Board was extremely helpful during the process, being approachable and providing assistance with the drawing up of the scheme document. All this made the process very educational for the Assupol team.
Assupol Life undertook a two week long road show process throughout South Africa to inform its policyholders of what the demutualisation means, to answer questions and to address any concerns. He said the road shows were an eye-opening experience to all, and it gave Assupol a chance to meet the people who really ‘own’ Assupol Life. The second part of the journey will be to make sure that our policyholders become proud shareholders of Assupol Life’s new holding company, Assupol Holdings Limited.
The process to meet with potential investors and future shareholders, including fund managers, will start early this year. The demutualisation puts Assupol in a position to raise capital for its organic growth and expansion. The company intends to raise cash to grow its business and create value for its shareholders.
The next steps will be to educate shareholders, informing them about redemption of shares to realize fair value and informing long-term shareholders about strategic investment possibilities and raising cash for organic growth. Assupol has given itself 24 months to list on the JSE, allowing time to find appropriate long-term shareholders, keeping in mind that the company would like to remain black-owned.
Email this article to a friend.