A $100 million investment from the New Zealand Superannuation Fund will allow life insurer Fidelity to develop its digital capabilities and continue growing, its chief executive says.
The $36 billion fund announced late yesterday that it would take a 41.1 per cent stake in Fidelity Life, provided the company gets approval from shareholders.
Nadine Tereora, Fidelity Life chief executive, said it was "delighted" by the investment and said it was a really great fit given the life insurance company was the largest New Zealand-owned life insurer.
Tereora said Fidelity had experienced significant growth in the past three to five years and had outpaced its ability to fund that growth through its own resources.
"We signalled at the last AGM [annual general meeting] that we would seek capital," she said.
The company received a lot of interest from potential investors but had come to a deal with the New Zealand Superannuation Fund - a fund set up in 2003 to help pay for the future costs of retiring New Zealanders.
Tereora said the investment would allow the company to build its digital capability, build on its existing business and open up new lines of business.
She said the company planned to leverage off its strength in the product manufacturing space.
Growing its digital capability would allow it to offer customers different ways of interacting with the business.
"We are in such a digital age. People are wanting to do things in their own time."
Whether that meant buying life insurance at 1am in the morning or after dinner time or just finding out more about their policy details or how to get in touch with a financial adviser.
The Super Fund has made a number of direct investments into New Zealand companies in recent years.
It successfully bought a stake in Z Energy which it helped list on the stock exchange and then sold down its investment, pocketing a sizeable gain.
Tereora said a sharemarket listing for Fidelity Life was always a possibility but "we are not focused on that now".
"The primary focus is on achieving our strategy," she said.
Fidelity Life is privately held by more than 150 shareholders.
The proposed investment is to be made up of $75m of new shares issued to the NZ Super Fund at $115 per share and the acquisition of at least $25m of existing shares.
As part of the deal for existing shares, eligible minority shareholders will have the opportunity to sell some or all of their shares to the NZ Super Fund for $130 per share. This offer does not extend to the company's majority shareholders.
Fidelity Life's board has recommended shareholders support the investment.
Shareholders, including the Fidelity Family Trust, will vote on changes to the insurer's constitution needed for the proposal to proceed at the company's annual meeting on December 12.
The deal will settle if the constitution is altered and other conditions are me, they said.
The NZ Super Fund will acquire shares from the Fidelity Family Trust at $115 per share.
The trust owns 55 per cent of Fidelity.
Independent advisers Simmons Corporate Finance have concluded that the value of the Fidelity Life shares involved in the proposed transaction is in the range of $110-$130 per share and that the total value of the company is between $198m and $220m.
-additional reporting BusinessDesk.