Posted on Sep 17, 2010 by Sergio Ulloa
Private equity fund manager Horizon Capital has agreed the purchase of Fortis Life Insurance Ukraine. The acquisition has been agreed with Belgian based Ageas Insurance International.
Ageas, who were formally known as Fortis Insurance, has reached a deal with US based Horizon Capital. The transaction fits with Ageas continuing their portfolio restructuring and follows the sale of their Turkish life & pensions business to the insurance unit of France's BNP Paribas in June 2010.
Ageas welcomed the approach from Horizon Capital as they believed it is in the best interests of all parties involved, including employees, agents and customers.
Speaking about the deal, Steven Braekeveldt, CEO Ageas Continental Europe, said: "The sale of our Ukrainian company is in line with the objective to streamline our portfolio against the strategic criteria we determined in September 2009. We are convinced that Fortis Life Insurance Ukraine will continue to capture the potential of the market in which it operates together with its new owner."
Ageas began operating in the Ukrainian insurance market in 2007, following the acquisition of Etalon Life by its predecessor company Fortis Insurance. Fortis Life Insurance Ukraine had developed a successful business establishing an agency network across the Ukraine, with broker, bancassurance and corporate activities; it became the sixth largest life insurance company in the Ukraine.
The move by Horizon Capital is part of its long term strategic plan to extend expansion in the emerging European financial services industry and follows previous ventures with the Universalna Insurance Company in Ukraine, MTBank in Belarus, the Fincombank in Moldova and the Platinum Bank in Ukraine.
The cost of the transaction has not been disclosed by either party, although Horizon Capital will be using EEGF II (Emerging Europe Growth Fund) funds raised in 2008; this fund amounts to US$390 million. The deal is expected to be completed by the end of 2010, subject to final approval by regulators.
The move by Horizon Capital is its first company acquisition since the onset of the world financial crises took effect in late 2008. The further expansion into the Ukrainian insurance market is part of a wider strategy for Horizon Capital, who specializes in mid cap investments in the financial service industry in the Ukraine and Moldova region.
The new owners will obtain access to current Fortis Life Insurance Ukraine insurance products, which include life insurance products for children's education, weddings, and retirements. This will expand the range of existing products offered by Horizon and strengthen their presence in the Ukrainian insurance market; it will enable them to compete with the likes of Alico Insurance for a slice of the premium life insurance market, which was estimated at 5% of total volumes in 2007.
Horizon Capital Co-Managing Partner Natalie Jaresko said "With the investment into Fortis Life Insurance Ukraine we continue to back sector leaders. The Company has an effective business model and is well-positioned to capture a considerable share of an underpenetrated market in the future. The experienced management team has proved it knows how to achieve growth in the number of satisfied customers by providing value to them and thus growing the company's top and bottom lines."
There are more than 50 Ukrainian insurers backed by foreign capital investment. The insurance market in the Ukraine is regulated by the State Financial Markets Commission, with restrictions on Ukrainian resident's ability to make insurance payments abroad.
The Ukrainian insurance market continues to develop and has experienced vigorous growth over recent years. Horizon Capital will be well placed to exploit the market potential in the Ukraine where they have considerable expertise.
Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. The company also has subsidiaries in France, Germany, Turkey, Ukraine and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand.
Horizon Capital is a private equity fund manager that originates and manages investments in mid-cap companies with outstanding growth and profit potential in Ukraine and Moldova. The firm prefers to invest in industry leaders in fast growing sectors, or younger companies in sectors with consolidation potential and in the case of buy-out opportunities, it identifies companies in more mature industries with solid revenues and unrealized profit potential. Horizon Capital. prefers to invest in financial services, fast moving consumer goods, retail, and industrial goods sectors.