Fairfax Financial to Acquire Additional 46.32% Interest in Gulf Insurance Group from KIPCO
April 19 2023 - 6:00AM
Fairfax Financial Holdings Limited ("
FFHL")
(TSX:FFH and TSX:FFH.U) and Kuwait Projects Company (Holding)
K.S.C.P. (“
KIPCO”) (KW: KPRO) are pleased to
announce that they have entered into an agreement (the
"
Agreement") pursuant to which certain affiliates
of FFHL (collectively, “
Fairfax”) will acquire all
of the shares of Gulf Insurance Group K.S.C.P.
(“
GIG”) (KW: GINS) under the control of KIPCO and
certain of its affiliates (the “
KIPCO Sellers”),
representing approximately 46.32% of the equity of GIG. Under the
terms of the Agreement, the KIPCO Sellers’ shares in GIG will be
acquired by Fairfax for aggregate proceeds to KIPCO of 263,653,200
Kuwaiti Dinar (approximately $860 million), representing a price
per share of 2.00 Kuwaiti Dinar (approximately $6.53) per share,
subject to a reduction by the amount of any dividends received by
the KIPCO Sellers after January 1, 2023 (the
“
Transaction”). Following the closing of the
Transaction, Fairfax’s equity interest in GIG will increase from
43.69% to 90.01%.
In accordance with applicable Kuwaiti regulatory
requirements and the rules of the Boursa Kuwait, the exchange on
which GIG’s shares are traded, the purchase price payable to the
KIPCO Sellers in connection with the Transaction will be paid by
Fairfax in full in Kuwaiti Dinar on closing. Pursuant to the terms
of the Agreement, immediately following the settlement of the
Transaction, the KIPCO Sellers shall return to Fairfax in cash the
full purchase price less an amount of Kuwaiti Dinar equal to $200
million, together with a cash payment equal to all dividends
received by the KIPCO Sellers from GIG after January 1, 2023, and
Fairfax will deliver to KIPCO a payment deed requiring Fairfax to
make four equal annual payments of $165 million to KIPCO beginning
on the first anniversary of closing of the Transaction.
“We are excited to increase our ownership
interest in GIG,” said Prem Watsa, Chairman and CEO of Fairfax.
“GIG is among the largest and most diversified insurance groups in
the Middle East and North Africa region, with operations in 13
different countries and a market-leading presence in each of
Kuwait, Jordan, Bahrain and Egypt. Since our first investment in
2010, GIG has proven to be a great company. It has provided stellar
results over the long term and is run by an experienced and
talented management team led by Khaled Saoud Al Hasan. We are
thankful to our partners at KIPCO for giving us this opportunity to
expand our insurance operations in the rapidly growing Middle East
and North Africa market.”
“Our partnership with Fairfax is one that we
greatly value,” said Sheikha Dana Naser Sabah Al Ahmad Al Sabah,
KIPCO’s Group CEO. “Together we have grown Gulf Insurance Group
into a leading player in the MENA insurance market. As a holding
investment company, KIPCO’s strategy is to acquire, scale and exit
companies when the time is opportune. Our journey has been one of
success, and we believe that GIG will continue to grow under
Fairfax and remain a leading player in the market.”
“KIPCO has been our strategic investor since
1997 and when Fairfax became a shareholder in 2010, it was the
start of a successful long-term partnership,” said Khaled Saoud al
Hasan, Group CEO of Gulf Insurance Group. “I want to warmly thank
KIPCO for believing in us. The exponential growth of the GIG Group
from KIPCO’s initial investment is a testament to the success
achieved over the course of our partnership. Fairfax strongly
believes in the continued growth potential of the GIG Group and the
region. With this transaction Fairfax is showing its long-term
commitment to the GCC markets and to the GIG Group that has
recently posted a net profit of $124.7 million for the financial
year 2022. We will continue to work with our decentralized
operating model that allows all subsidiaries to operate
independently, while benefitting from Fairfax’s knowledge and
collective experience in over 40 markets around the world. In the
coming months, we will work closely with each of the regulators of
the GIG Group entities to make this transaction seamless and
beneficial for all parties.”
“GIG Gulf and GIG Saudi have been proudly part
of the GIG Group since the acquisition from AXA in 2021, and the
collaboration with our new shareholders, both KIPCO and Fairfax,
has been extremely smooth and positive,” said Paul Adamson, Chief
Executive Officer of GIG Gulf. “I am convinced that Fairfax, with
almost 40 years of experience in insurance, reinsurance and
investment management is well placed to ensure that GIG continues
with its plan to be a leading regional insurer and to pursue our
growth path. For all GIG entities, the opportunity to become part
of a global Insurance brand such as Fairfax is truly unique and
will allow us to further leverage each other’s and Fairfax’s
expertise.”
The Transaction is subject to the receipt of all
necessary approvals from applicable regulators, including merger
control, capital markets, stock exchange and insurance regulators
in each relevant jurisdiction in which GIG operates, and the
satisfaction of other customary closing conditions, including a
condition that the volume-weighted average price of the
publicly-traded shares of GIG in the six month period prior to
closing must not exceed the price per share to be paid to the KIPCO
Sellers (being 2.00 Kuwaiti Dinar, as adjusted to account for any
dividends received by the KIPCO Sellers after January 1, 2023).
Closing of the Transaction is currently expected to occur in the
second half of 2023.
In accordance with regulations of the Capital
Markets Authority of Kuwait, the closing of the Transaction between
KIPCO and Fairfax will require Fairfax to initiate a mandatory
tender offer to all other holders of GIG shares. Fairfax expects
the launch of the mandatory tender offer to occur shortly after the
closing of the Transaction, and in any event within thirty days
thereafter.
Fairfax Financial Holdings Limited is a holding
company which, through its subsidiaries, is primarily engaged in
property and casualty insurance and reinsurance and the associated
investment management.
For further information contact: John Varnell,
Vice President, Corporate Development at (416) 367-4941.
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