LONDON: Discovery Group CEO, Adrian Gore, says capital raised via its R4 billion to R5 billion rights issue will primarily be destined for the growth of the newly rebranded VitalityLife in the UK.
One billion rand to R2 billion will be used for “key, adjacent opportunities” in South Africa, with further information on this expected in the next few weeks.
The majority of the capital raise will be used to fund the significant upfront acquisition costs typical of the growth of any life insurance business.
In an interview with Moneyweb, Gore said that given how the UK is growing the use of capital to fund new business acquisition costs gives the right balance of risk and return. “A fast-growing new life insurer requires funding,” Gore told Moneyweb. Given the rate of growth about £350 million (R2.7 billion) of funding has already gone into VitalityLife via Prudential’s balance sheet.
As we go forward, the total funding required will be between £700 million (R12.4 billion) and £800 million (R14.2 billion),” Gore said.
