The NZ$36 billion New Zealand Superannuation Fund and Fidelity Life, New Zealand's largest Kiwi-owned life insurer, today announced a proposal for the Fund to take a minimum NZ$100 million, 41.1% cornerstone stake in Fidelity Life. The transaction is subject to a number of conditions, some of which require action from shareholders.
Fidelity Life Chair, Brian Blake, says 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."
"If our shareholders provide the necessary approval for the investment to proceed, the new capital will allow us to deliver on our future strategy providing strong, sustainable returns and growth over the long term," said Mr Blake.
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 a minimum of $25 million of existing shares. As part of the acquisition of existing shares, eligible minority shareholders (including all New Zealand resident 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. The NZ Super Fund will acquire shares from the Fidelity Family Trust at $115 per share.
"The NZ Super Fund is a great fit with Fidelity Life. We were both founded by Kiwis for Kiwis and are focussed on protecting the future for New Zealanders. The proposed investment represents a strong vote of confidence in Fidelity Life by New Zealand's pre-eminent investor," said Mr Blake.
NZ Super Fund Chief Investment Officer Matt Whineray 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."
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.
"This is an exciting future step for Fidelity Life. We have come a long way since we were founded in 1973. We have more than 100,000 customers and our products are distributed via a network of 2,700 independent financial advisers and through strategic alliances. This new capital will enable us to build digital capability to support innovation, productivity and improved support for customers, advisers and our partners," said Nadine Tereora, Chief Executive of Fidelity Life.
Fidelity Life's Board is recommending shareholders support the investment. Shareholders, including the Fidelity Family Trust, will vote on changes to Fidelity Life's constitution needed for the proposal to proceed at the company's Annual Meeting on 12 December. If the constitution is altered and other conditions are met settlement will occur after then.
Shareholders can expect to receive their voting papers with the Notice of Meeting on 9 November.
About Fidelity Life
Fidelity Life is a New Zealand-owned insurance company with the purpose of protecting the New Zealand way of life. The company believes independent financial advice matters in ensuring Kiwis get access to the insurance protection they need. Fidelity Life distributes its products through a network of 2,700 independent financial advisers, as well as through strategic alliance partners, and employs around 300 staff across six offices. For more information please visit www.fidelitylife.co.nz
About The New Zealand Superannuation Fund
The $36 billion NZ Super Fund is a global investment fund that was established by the NZ Government to help pre-fund universal superannuation. A long-term, growth-oriented investor, the Fund has returned 10% p.a. since inception in 2003, and currently has around $5 billion invested in NZ, including significant stakes in Kaingaroa Timberlands, Datacom, Kiwibank and Metlifecare. For more information please visit www.nzsuperfund.co.nz