Johannesburg - Financial services group FirstRand [JSE:FSR]
has sold its 45% stake in short-term insurer Outsurance to Rand Merchant Insurance Holdings.
FirstRand said the sale was effective from May 4. It also said the sale consideration of R3.75bn agreed on last year was adjusted for an interim dividend payment and interest accrued on the sale consideration, resulting in a final sale consideration of R3.64bn.
FirstRand chief operating officer Johan Burger previously said the group decided to sell Outsurance due to limited liquidity options as a result of the structure of its shareholding in the insurer. Outsurance was a joint venture between FirstRand and Outsurance management.
"Outsurance is a fantastic business but is a non-strategic asset as it does not sell directly to FirstRand's banking clients. Following the disposal of our stake we will still have a number of integrated insurance operations within the group, and we continue to see the sale of insurance products to our banking customers as a significant area of growth," said Burger.
FirstRand also said it sold preference shares held by the FirstRand group in Outsurance to Rand Merchant Insurance for a sale consideration of R401m.
Rand Merchant said it would sell 16.8% of the ordinary share capital of Outsurance to Outsurance's management for R552m. This would leave Rand Merchant with 83.2% ownership of the insurer.
Rand Merchant also said it would facilitate the transaction by providing term funding for part of the sales price to the management group. This transaction is expected to be implemented during July.