Insurance company Alliance Assurances (www.allianceassurances.com) plans an initial public offering on the Algiers Stock Exchange (www.sgbv.dz) from 2 November for one month. It will be the first private company to list on the Bourse d’Alger.
Approval was given by the Algerian Capital Markets Authority (Commission of Organization and Surveillance of Stock-market transactions – www.cosob.org) on 8 August. The financial adviser for the offering is Nomad Capital (www.nomadcapital.com – website says “under construction”), with PriceWaterhouseCoopers and Hadj Ali.
The share price is 830 Algerian Dinars (US$11.22) and the company plans to issue 1.8 million shares. The company had increased its paid-up capital to 800 million Algerian Dinars ($10.8 million) in 2009, and with the current offering it aims to increase to 2.2 billion Algerian Dinars ($29.7 million).
According to local reports, General Manager Hacen Khelifati has indicated that the company’s shares are in 5 categories: 20% for individuals with Algerian nationality, 30% for Algerian companies, 30% for institutions – including foreign investors “abiding to the Algerian legislation”, 10% for insurance brokers and 10 % for the company’s employees across the 35 Algerian provinces.
He told Reuters that the company would also sell 30% to a European company in a separate transaction. He did not name the suitor and said the transaction awaits regulatory approval
Khelifati was also reported as saying that the company would also benefit from government incentives to encourage listing including a 5-year tax holiday on profits from the operation in order to raise new capital for development and to help revitalise the Algiers Bourse. He was quoted on Reuters as saying 4 more companies would list before the end of 2011.
The aim of the capital expansion is to meet the regulatory requirements of an executive decree (N 09-375 of 16 November 2009) and to be able to capitalize on the expected strong growth in the insurance sector. According to website www.lesafriques.com, the insurance sector had turnover of €790 million in 2008 and is growing by 13% a year. It is dominated by state-woend firms (70%) and Alliance is the second private company, with a 4% market share.
Alliance also plans to use the capital to set up 2 new subsidiaries:
• A real estate asset manager to maximize value for Alliance and third-party investors;
• A venture capital vehicle dedicated to investments in sectors related to the insurance field.
Alliance Assurances already has two subsidiaries: ATA, and a dedicated IT engineering subsidiary named ORAFINA.
Purchase orders will be underwritten by a banking syndicate which is led by Crédit Populaire d’Algérie and includes Banque Nationale d’Algérie, Banque Extérieure d’Algérie, Banque de Développement Local, Caisse Nationale d’Epargne et de Prévoyance-Banque, Banque de l’Agriculture et du Développement Rural, la Société Générale Algérie and BNP Paribas Algérie.
This operation is backed by an advertising campaign (press, TV, radio, posting, Web, event) to give people the right information and encourage them to subscribe. The motto is ” Become shareholders and let’s grow together”
After the subscription period, Alliance Assurances aims to have its shares listed for trading on the Bourse d’Alger during the first quarter of 2011. The CPA will provide the liquidity to the stock over a 1-year period.
According to the regulatory requirements, Alliance Assurances will communicate regularly its financial results and any critical data relative to its activity and its development.
Alliance Insurances is a joint-stock company created in July 2005 and says it is now a multiline insurance company with more than 300,000 insured clients and total net premiums in 2009 of 2.8 billion Algerian Dinars with a net profit of 312 million Algerian Dinars, providing a 39% return on equity, according to a press release.