Fairfax Financial Holdings Limited has announced that it has reached a deal to more than double its stake in Gulf Insurance Group (GIG) K.S.C.P. from buying an additional roughly 46% interest from Kuwait Projects Co.(Holding) K.S.C.P. for about $860 million.
When the transaction closes, Fairfax’s equity interest in GIG will increase from 43% to roughly 90%.
The deal is subject to the receipt of regulator approvals, which includes merger control, capital markets, stock exchange and insurance regulators in each of the relevant jurisdiction in the Middle East and North Africa where Gulf Insurance operates.
Closing of the transaction is 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.
Additionally, Fairfax also 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.
Prem Watsa, Chairman and CEO of Fairfax, said: “We are excited to increase our ownership interest in GIG. 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.”
Sheikha Dana Naser Sabah Al Ahmad Al Sabah, KIPCO’s Group CEO, commented: “Our partnership with Fairfax is one that we greatly value. 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.”
Khaled Saoud al Hasan, Group CEO of Gulf Insurance Group, added: “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. 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.”
Paul Adamson, Chief Executive Officer of GIG Gulf, said: “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.
“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.”
