OUTsurance GROUP LIMITED - Acquisition of additional equity stake in Youi Holdings

Acquisition of additional equity stake in Youi Holdings

OUTSURANCE GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2010/005770/06
ISIN: ZAE000314084
Share code: OUT
(OGL or the Group)

ACQUISITION OF ADDITIONAL EQUITY STAKE IN YOUI HOLDINGS

1. Introduction

Shareholders are advised that Outsurance Holdings Limited (OHL), an 89.7%-
owned subsidiary of OGL, has entered into an agreement with Mr Roos, a non-
executive director of OHL and its listed parent company, OGL, to acquire 50%
of his shareholding in Youi Holdings (Youi) for A$36 million, effective 30
March 2023 (the first transaction).

Mr Roos is one of the founders of OHL and was a member of the team which
started Youi in 2008. He owns a 5.3% interest in Youi and served as the
Chief Executive Officer of OHL up to 2018.

Mr Roos historically acquired his interest in Youi through an Employee Share
Option Scheme (ESOP) initiated at the inception of Youi in 2008.

2. Overview of Youi and rationale for the first transaction

Youi is the holding company of the Group’s Australian insurance operation,
Youi (Proprietary) Limited. OHL currently owns an 89.8% interest in Youi.

OHL’s stated objective is to expand organically through the establishment of
more insurance products and wider distribution capabilities. Youi has
enjoyed significant growth in recent years with the expansion of its product
range and distribution partnership with Blue Zebra Insurance.

Youi is well positioned for future growth and value creation which underpins
the Group’s intention to increase its long-term stake in the business.

As per the Group’s unaudited interim financial statements for the six months
ended 31 December 2022, prepared in accordance with International Financial
Reporting Standards, the total net asset value of Youi on 31 December 2022
was R5 270 million and the profit after tax for the six months ended 31
December 2022 was R653 million.

3. Terms of the first transaction

OHL has entered into a Sale and Purchase Agreement (Agreement) with Mr Roos
to acquire 50% of his shareholding in Youi for a total cash purchase
consideration of A$36 million.

The first transaction is subject to customary terms and conditions for
transactions of this nature, including certain conditions being fulfilled,
including obtaining Exchange Control Approval from the Financial
Surveillance Department of the South African Reserve Bank.

The long-stop date for the first transaction is 31 May 2023. Should the
long-stop date apply, the shares which were not acquired in the first
transaction will be subject to the Call Option in the second transaction as
outlined in 4 below.

4. Other significant terms of the agreement

The agreement further provides the Group with a Call Option (the second
transaction) to acquire the remaining balance of the shares by 31 October
2023. The second transaction will be referenced to the prevailing valuation
at the time and subject to the standard valuation approach applied to the
Youi ESOP.

5. Small related party transaction considerations and independent fairness
   opinion

Each of the first and second transactions are individually classified as
small related party transactions in terms of paragraph 10.7 of the JSE
Listings Requirements.

The board of directors of OGL (board) is therefore required, pursuant to
paragraphs 10.7(a) and (b) of the JSE Listings Requirements to provide
written confirmation to the JSE, from an independent professional expert,
that the terms of the first and second transactions are fair insofar as OGL
shareholders are concerned.

In this regard the board duly appointed Deloitte & Touche Financial Advisory
(Deloitte) as the independent professional expert. Deloitte provided the
board with a fairness opinion regarding the first transaction (fairness
opinion) and has advised the board that they believe that the terms thereof
are fair to OGL shareholders.

The fairness opinion has been approved by the JSE and is available for
inspection at the registered office of OGL at 1241 Embankment Road, Zwartkop
Extension 7, Centurion, Gauteng for a period of 28 days from the date of
this announcement. It will also be made available during this period on
request by email to investorrelations@out.co.za.

Centurion
31 March 2023

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 31-03-2023 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.