Nigerian Stock Exchange (NSE) has approved application by Law Union & Rock Insurance seeking voluntary delisting of its shares from the main board of the Exchange.
The voluntary delisting is part of ongoing acquisition of Law Union by Anglophone West Africa private equity firm, Verod Capital Management.
Verod has offered N5.3 billion for the acquisition of the entire share capital of Law Union in a major bid that may signal the opening up of mergers and acquisitions in Nigerian insurance industry.
The board of Law Union had confirmed that it received a binding offer from Verod Capital seeking to acquire the entire 4.296 billion ordinary shares of 50 kobo each of Law Union at N1.23 per share. The offer thus valued Law Union at N5.28 billion.
The offer price of N1.23 per share represented a premium of 208 per cent on the 60-day volume weighted average share price and 140 per cent on Law Union’s closing share price on February 26, 2020.
The approval of NSE is one of the regulatory approvals needed to consummate the transaction. The transaction is still subject to approval of National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC) and the Federal Competition and Consumer Protection Commission (FCCPC).
Verod Capital focuses on investing equity and equity-linked capital in growth companies across various consumer-driven sectors in Nigeria, especially the insurance sector.
Insurance companies are in a hot race to raise new equity capital to meet new minimum capital requirements for various insurance functions as directed by NAICOM.
NAICOM had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.