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22 Mar 2018 23:06
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  •   Home > News > Business

    Suncorp's Vero sells Tower stake for $53m

    Suncorp Group's Vero Insurance has sold its cornerstone stake in rival insurer Tower to US private equity firm Bain Capital for $53.9m.

    8 March 2018

    Suncorp Group's Vero Insurance has sold its cornerstone stake in rival insurer Tower to US private equity firm Bain Capital for $53.9 million, registering a $7.5m loss in the process.

    The Australian-owned insurer has spent $60.5m building up and retaining a 19.99 per cent shareholding in NZX-listed Tower before mounting a $236m takeover bid that was rejected by the Commerce Commission over fears it would detract from local competition.

    Vero bought shares at an average entry price of 91 cents a share including via participation in Tower's deeply discounted rights issue at 42 cents a piece. It was offering $1.40 a share in its failed takeover attempt.

    Vero said it sold its shares to Bain Capital at 80 cents a share, amounting to $53.9m in total. Tower's NZX-listed shares closed at 78 cents on Wednesday and were up 3.9 per cent at 81 cents on Thursday.

    "Total losses amount to $7.5 million which was within our risk appetite given the compelling nature of the transaction to acquire 100 per cent of Tower and the value creation it would have achieved," a spokesman said.

    Suncorp NZ recognised a $12m loss on the value of its Tower stake when reporting its first-half results last month, and Thursday's sale is at a premium to that, meaning it will register an $8.5m gain on the sale.

    Tower chair Michael Stiassny acknowledged the sale in a statement to NZX, saying the insurer "welcomes its new largest shareholder, Bain Capital Credit, and looks forward to working with them".

    Bain Capital manages US$75 billion of assets around the world.


    © 2018 NZN, NZCity

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