| Following
a highly competitive international bidding process, a leading Nigerian
privately owned insurance firm, Industrial and General Insurance
Company Ltd (IGI), paid over UShs. 6.2bn ($ 3.625m) for a 60% stake in
Government owned National Insurance Corporation Ltd (NICL). Government successfully sells 60% shares in National Insurance Corporation (NICL)
National
Insurance Corporation Limited was 100% owned by Government and is
listed In Class III of the Public Enterprise Reform and Divestiture Act
i.e. an enterprise in which Government is to divest 100%.
The
race for NICL shares attracted stiff competition from companies and
consortia which expressed interest. Pre-qualification stage which
insisted on at least five years experience in the insurance business
and similar experience in the specialized Life policy saw only five
companies survive the test.
THE BID PROCESS
The
bid process comprised two stages competitive bidding – the
pre-qualification and final bid submission stages. Invitation of
prospective bidders was made through local and international media.
Nine bids met all the pre-qualification criteria and were permitted to proceed to the second stage. These were:
- Sanlam Life Insurance Ltd, South Africa
- NICO Holding Limited, Malawi
- Insurance Company of East Africa, Kenya
- United Assurance Consortium
- Hollard Group, South Africa
- Apollo Insurance Company Limited, Kenya
- GoldStar Insurance Company Ltd
- Industrial And General Insurance Company Limited, Nigeria
- PUL-CON Ltd
In
accordance with bid terms, the pre-qualified bidders were invited to
carry out their due diligence, prior to submission of final bids. Only
the following five bidders submitted final bids:
- The Insurance Company of East Africa Ltd, Kenya
- UAP Provincial Insurance Co Ltd, and United Assurance Co,
- Apollo Insurance Co Ltd (Apollo), APA Insurance Ltd with Elly Karuhanga;
- Goldstar Insurance Co Ltd with Cannon Assurance Co Ltd through Goldstar Cannon Alliance Ltd;
- Industrial & General Insurance Co Ltd, Nigeria.
The
technical bids were evaluated and all the five bidder’s technical
bids qualified for the opening of the financial envelopes. The results
of the financial bids are as indicated below.
|
Bidder |
Amount |
1 |
Apollo Insurance Co Ltd, APA Insurance Ltd with Elly Karuhanga |
US$1,854,000.00 |
2 |
Goldstar Insurance Co Ltd with Cannon Assurance Co Ltd through Goldstar Cannon Alliance Ltd |
US$3,611,000.00 |
3 |
Industrial & General Insurance Company Ltd, (IGI).
|
US$3,625,747.93 |
4 |
Insurance Company of East Africa Ltd, Kenya (ICEA) |
US$1,800,005.00 |
5 |
UAP Provincial Insurance Co Ltd, and United Assurance Co. |
US$ 252,566.00 |
Industrial
and General Insurance Company Ltd (IGI) emerged the highest bidder with
a price bid of US$3.625m and was invited for post bid negotiations.
KEY ASPECTS OF IGI’ BUSINESS DEVELOPMENT PLAN
IGI
is a composite insurance company duly registered and licensed under the
laws of the Federal Republic of Nigeria intends to do the following:
- Projected to grow the NICL premium at 30-45% for general business and 35-100% for life business.
- Detailed plan for development of regional network through main, local and sub-branches over a two phase approach
- Introduction of various new products proposed including crop insurance and other long term products.
- General development and total injection of US$1m in 2006
- Information Technology upgrade and integration of branch network within one year of acquisition
- Development of NICL brand
EXECUTION OF THE AGREEMENTS
The
Buyer executed three agreements on the transaction i.e. the Share Sale
and Purchase Agreement (SSPA), Shareholders Agreement (SHA) and the
Technical Assistance and Commitment Agreement (TACA). IGI provided the
one time lump sum payment.
GOU’s
commitment to divest the remaining 40% shareholding by way of Initial
Public Offer through the Stock Exchange within the next 18 months. The
three agreements were signed on the 2nd June 2005.
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PSO Study
