If its new fund they don't have to declare until they hit 5% threshold which is about 21mln shares. So it may take some time to know who the buyer may be.
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Nice clearance of the lot at close of play at 87c.
I see the Australian media have been running stories on the parties participating in a process to buy CBA’s general insurance business. Maybe this has highlighted the value of Tower and increases the chances Bain may instigate an auction to find a buyer for Tower now that Tower’s house is in (relative) order?
Yes, interesting - the sale price for CBA business is likely to be around 1.3 times Gross Written Premium (same multiple as recent sale of Westpac's general insurance business)
Applying the same metric to Tower's business would see a value around 1.3 times $385m GWP = $500.5. If we add the current cash assets of $140m we get a total value of $640m or $1.52 per share. So some 75% potential upside to the current $0.87
Presumably it’s only the cash on hand above the required solvency margin which can be described as surplus. Cash required to be held to operate the insurance business would be included in the valuation of the insurance business.
A key question is who the likely bidders for Tower would be given that both IAG and Suncorp would face regulatory issues on the competition front. Given the banks are getting out of insurance, then other likely parties are offshore insurance companies looking to expand in NZ.
Good point, S Lad. The further question is whether the govt or regulator/s would be happy seeing the last significant NZ general insurer being bought by foreign interests.