A South African investment firm has the largest stake in Hastings Group after the biggest shareholders, including Goldman Sachs, agreed to sell nearly 30 per cent of the insurer in a deal worth close to £500 million.
Rand Merchant Investment Holdings said yesterday that it had agreed a deal to buy 29.9 per cent of Hastings at between 248p and 255p per share, a premium of as much 15 per cent to its closing price on Tuesday, making it the insurer’s largest investor.
Goldman Sachs, which had once owned half of Hastings and had been the biggest backer of the insurer with a 40 per cent stake, will see its holding drop to 22.6 per cent. The company did not give details of the other selling shareholders, but these are likely to have been the insurer’s founders who retain a 13.2 per cent stake.
Several of the founders are understood to have been major participants in the sell down. The company did not say which sold shares, but among the biggest individual investors in the insurer are Neil Utley, the founder and former chairman of Hastings, and Edward Fitzmaurice, the company’s former chief executive.
The sale comes two months after Goldman Sachs and some of the founders cut their holdings with a public sale that saw 7 per cent of the group’s stock change hands.
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RMI’s investment is understood not to be the prelude to a full takeover of the company, which only listed on the London market last year. RMI said that the investment would be strategic and was part of a deal to build closer relations with its existing insurance operations in the UK.
Herman Bosman, chief executive of RMI, will join the board under a deal that will allow the investor to appoint one director, as well as send an “observer” to board meetings, though without any right to vote.
“We welcome RMI as shareholders and look forward to working with Herman Bosman [RMI chief executive] as we continue to execute on our attractive strategy,” Gary Hoffman, chief executive of Hastings, said.
Shares in Hastings rose after the announcement of the deal, which values RMI’s stake between £487 million and £499.5 million. At close, Hastings shares were up 3.2 per cent at 228½p, valuing it at £1.5 billion.
The stake is intended to lead to greater co-operation between Hastings and RMI’s existing businesses in the insurance sector, Discovery and MMI Holdings, which both already operate in the British market.
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Analysts at KBW, the specialist financial services investment bank, said that the purchase by RMI shares was “an endorsement” of Hastings.