(Adds share price, CEO comment)
JOHANNESBURG, March 28 (Reuters) - Leading South African insurer Sanlam has raised 5.7 billion rand ($490 million) by selling new shares to help fund its joint acquisition of Moroccan company SAHAM Finances, it said on Wednesday.
Sanlam said it placed 65.5 million new shares, or roughly a 3 percent stake, through an accelerated bookbuild process to institutional investors at 87 rand per share, representing a discount of 5 percent to its closing price on Tuesday.
Shares in South Africa’s largest insurer fell 7.28 percent to 84.60 rand as issuing new shares dilutes the shareholding of existing investors.
Sanlam, along with joint partner and fellow South African insurer Santam Ltd, said this month that it will buy the rest of SAHAM Finances for $1 billion, as part of a plan to become a pan-African insurance group.
It said the proceeds from the placing will be used to fund that acquisition.
“The success of this placing indicates the significant investor confidence in Sanlam following a long period of consistent delivery on our strategic priorities and is evidence of the renewed confidence in South Africa as well,” Sanlam Group Chief Executive Officer, Ian Kirk said in a statement.
Subject to approval by the Namibian Stock Exchange Limited, the placing shares will also be listed on there.
J.P. Morgan and Deutsche Bank are acting as joint global coordinators and joint bookrunners. ($1 = 11.6443 rand) (Reporting by Nqobile Dludla, editing by Louise Heavens/Keith Weir)