DealMakers AFRICA 2020 Annual

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Deal of the Year (West Africa)


Tangerine Life Insurance’s acquisition of ARM Life

The Nigerian insurance sector is in a new growth phase, jump-started by the National Insurance Commission (NAICOM) announcement in May 2019 of increased minimum capital requirements (from ₦2 billion to ₦8 billion), in an effort to strengthen regulatory and capital requirements, to ensure the solvency and sustainability of insurance companies in a bid to create stronger and larger companies. Analysts predicted that the higher capital requirement imposed by the regulator, which was scheduled to be implemented from December 2020 but has been suspended for six months, would slash the number of insurers in Nigeria by half.


It is against this backdrop of a rapidly evolving industry that West African investor Verod Capital Management, and Tangerine Life, took the strategic decision in March 2020 to acquire a 77.22% equity stake in ARM Life from Asset and Resource Management and Continental Reinsurance for a cash consideration of ₦0.63 per share, for a total acquisition value of ₦4,66 billion.

Acquired by Verod Capital Management in 2019 for an undisclosed sum – via its growth fund from South African Momentum Metropolitan – Tangerine Life (formerly Metropolitan Life Insurance Nigeria)  was considered a solid platform for rapid growth.

In July, as per regulatory requirements, Tangerine Life made a Take-Over Offer to all other shareholders of ARM Life holding the remaining 22.78% stake. The offer price was ₦0.63 per share. The offer yielded a further 1.05% equity stake bringing Tangerine Life’s total shareholding in ARM Life to 78.28%.

Due to the stipulated increase in minimum capital requirements for life insurance, general insurance, composite insurance and reinsurance companies by NAICOM, Life insurers are now expected to have a minimum capital of ₦4 billion. The boards of Tangerine Life and ARM Life agreed to a proposal to merge both companies into a single legal entity. Accordingly, remaining minorities were offered a cash consideration of ₦0.70 per share while providing the option to elect shares in the ratio of 8 shares in Tangerine Life for every 100 shares held in ARM Life. The cash consideration was subsequently increased to ₦0.75 per share following extensive shareholder engagement, valuing the transaction at ₦1,6 billion. The merger provides the ARM Life shareholders with an opportunity to realise value for their investment as ARM Life’s shares have been thinly traded on the NASD OTC Securities Exchange and highly illiquid.

A number of regulatory approvals from the Nigerian Securities and Exchange Commission were required to implement the transaction, as well as clearance from the industry regulator, The National Insurance Commission and the Federal Inland Revenue Service.

The merger of Tangerine Life and ARM Life makes the consolidated entity the fourth largest life insurer in Nigeria, with enhanced capabilities as the unique strengths of both businesses are blended and optimised, with a larger retail footprint and an adequately capitalised balance sheet. With the onset of COVID-19 and the subsequent digital turbocharge, innovation is paramount in ensuring customer satisfaction in the current business landscape which, if embraced and managed, will ensure exceptional value creation. 

Advisers to the merger
Financial Advisers: Stanbic IBCT 
Legal Advisers: Udo Udoma & Belo-Osagie


Runner up


FCMB Pensions’ acquisition of AIICO Pension Managers

The Nigerian Pension Industry has evolved over the years, having undergone multiple changes over the past seven decades, but it still needs a modernised and liberalised set of investment options if it is to maximise its potential and overcome the shadow cast by claims of rampant corruption, poor management of funds and ineffective governance.

While pension funds can invest in development projects, they need to do so through dedicated infrastructure funds. The nation’s regulator has, so far, reacted positively to recommendations from the Pension Fund Operators Association of Nigeria that retirement funds be able to finance infrastructure directly. Allowing for direct investments into infrastructure projects will push more money into the economy, while giving the returns that pension funds need.

As the industry matures, a consolidation of industry players is expected. In June 2020, FCMB Group advised the Nigerian Stock Exchange that its pension arm, FCMB Pensions, had entered into discussions with AIICO Insurance to acquire a 70% stake in AIICO Pension Managers, and a further 26% stake held by other shareholders. Financial details of the acquisition of a 96% stake are yet to be made public, though it is estimated that the price tag is in the region of ₦11 billion.

FCMB Group acquired a majority stake in Legacy Pension Managers (rebranded FCMB Pensions) in 2017, with the stake increasing to 91.6% in 2019. As at March 2020, assets under management (AUM) had grown to ₦325 billion, with 350,000 customers. The acquisition of AIICO Pensions adds a further ₦126 billion to AUM, and another 240,000 customers – a strategic decision, taken to secure greater market share of the Nigerian pension industry. 

The transaction is part of a deliberate strategy to grow FCMB Group’s investment management portfolio, and to build on the inherent synergies between the pension business and banking, which will leverage FCMB’s extensive distribution platform, comprising 200 branches and a strong web and mobile presence. The opportunity to cross-sell to an expanded client base, and the expected increase in fees, will be positive for revenue, and management has committed to use its scale to positive effect towards investing in the growth of the Nigerian economy.  

The proposed transaction is subject to the approvals of the National Pension Commission (the primary regulator of pension fund administrators), the Federal Competition and Consumer Protection Commission (the primary anti-trust regulator), the Securities and Exchange Commission, and the Central Bank of Nigeria. 

Legal Advisers: Banwo & Ighodalo (FCMB Pensions)


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