Vitalis Group SA — Funding Strategy & Investor Returns
The ZAR 1.0 billion Series A funding strategy, the use of proceeds, the capital plan and the indicative investor returns including the 28.4% equity IRR and 3.2× multiple.
Section 20 · Business Plan
Funding Strategy & Investor Returns
The ZAR 1.0 billion Series A funding strategy, the use of proceeds, the capital plan and the indicative investor returns including the 28.4% equity IRR and 3.2× multiple.
Vitalis Group SA is seeking a Series A equity commitment of R1.0
Billion to fund the licensing, technology build, brand, and underwriting
capital required to reach EBITDA breakeven and SAM solvency
self-sufficiency. The Series A round is structured to attract a lead
institutional investor (cornerstone) together with a syndicate of
strategic and financial co-investors. A planned Series B raise of R600M
in Year 4 is anticipated to support SADC expansion and product
acceleration.
20.1 Series A Round Terms (Indicative)
| Term | Indicative Terms |
|---|---|
| Issuer | Vitalis Group SA (Pty) Ltd |
| Round size | R1,000,000,000 (One billion Rand) |
| Instrument | Series A Preferred Shares, convertible into Ordinary Shares at IPO or qualified exit |
| Pre-money valuation | R450 million (founder, sweat-equity and seed pool) |
| Post-money valuation | R1,450 million |
| Series A shareholding | 68.97% on a fully diluted basis |
| Cornerstone allocation | R300–500 million for a single lead, with reserved board seat |
| Liquidation preference | 1.0x non-participating, with conversion to ordinary |
| Anti-dilution | Broad-based weighted average |
| Dividend | 8% cumulative, payable in cash or PIK at Company election, suspended pre-breakeven |
| Information rights | Quarterly management accounts, audited annuals, board pack access |
| Board representation | 4 of 11 directors (Series A class), including the Chair |
| Reserved matters | Standard list including budget, capex >R50M, M&A, executive comp, related-party |
| Tag and drag rights | Standard, drag at 75% threshold |
| Use of proceeds | See Section 1.7 and chart at Section 1.7 |
| Conditions precedent | PA / FSCA licence in principle; KYC and FICA; due diligence sign-off |
| Long-stop date | 12 months from term sheet signature |
20.2 Capitalisation Table Evolution
| Shareholder Group | At Founding | Post-Series A | Post-Series B (Yr 4) | Post-IPO (Yr 7, illustrative) |
|---|---|---|---|---|
| Founders / Management | 70% | 21.7% | 17.0% | 12.5% |
| ESOP and incentive pool | 15% | 4.7% | 5.5% | 5.0% |
| Seed / friends and family | 15% | 4.7% | 3.7% | 2.7% |
| Series A investors | — | 68.9% | 53.8% | 39.5% |
| Series B investors | — | — | 20.0% | 14.7% |
| IPO new investors (free float) | — | — | — | 25.6% |
| Total | 100% | 100% | 100% | 100% |
20.3 Investor Returns Framework
The Company has modelled three exit scenarios (IPO base case, trade
sale, and secondary continuation) under Base, Upside, and Downside
operating scenarios. The aggregated 3×3 matrix of returns to a Series A
investor is presented below.
| Scenario | IRR to Series A | MOIC at Exit | Exit Path Assumption |
|---|---|---|---|
| Upside × IPO (Yr 7) | 42.1% | 4.6x | IPO valuation R22-26 Bn, partial sell-down at IPO |
| Base × IPO (Yr 7) | 28.4% | 3.2x | IPO valuation R18-22 Bn |
| Downside × IPO (Yr 8) | 15.8% | 2.1x | IPO delayed 12 months, valuation R12-15 Bn |
| Base × Trade sale (Yr 6) | 24.8% | 2.8x | Strategic buyer at ~12x EBITDA |
| Downside × Trade sale (Yr 7) | 12.4% | 1.8x | Trade sale at 9x EBITDA (compressed) |
| Base × Secondary (Yr 5) | 18.2% | 1.7x | Secondary to PE continuation fund |
| Stress (combined downside) | 6.0% | 1.3x | Distressed sale Year 8 at book + 25% |
20.4 Exit Waterfall — Illustrative Base Case
Illustrative distribution of IPO proceeds to a Series A investor in
the Base × IPO scenario, assuming a Year-7 listing at the mid-point of
the indicated range (~R20 Bn enterprise value).
| Component | Amount (R million) | Notes |
|---|---|---|
| Series A investment (cost) | 1,000 | Year 0 |
| Cumulative PIK dividends (Yr 1-7) | ~640 | 8% cumulative, suspended pre-breakeven |
| Pro-rata IPO value (39.5% × R20 Bn) | ~7,900 | Pre-secondary sell-down |
| Less: PIK redemption out of proceeds | (640) | |
| Net Series A distribution at IPO | ~7,260 | 7.26x gross-of-PIK MOIC |
| Series A IRR (Year 7 IPO) | 28.4% | After PIK and management fees |
20.5 Comparable Transactions and Valuation Validation
The target IPO valuation range is supported by reference to South
African and emerging-market comparables. The Company’s growth-adjusted
EBITDA multiple sits between the high-growth peer (Discovery 2008-2012)
and steady-state insurance peers, which we believe reflects the
integrated business model fairly.
| Comparable | EV / EBITDA | P / EV (Life) | EBITDA growth (%) | Geography |
|---|---|---|---|---|
| Discovery (current) | 14.2x | 1.4x | 12-15% | SA / UK |
| Sanlam | 8.6x | 1.1x | 6-8% | SA |
| Old Mutual | 7.8x | 0.9x | 4-6% | SA / Africa |
| Outsurance Group | 11.4x | n/a | 10-12% | SA / AUS |
| Lemonade (US, growth) | — | n/a | 30%+ | USA |
| Implied Vitalis Yr 7 (Base) | 12.0x | 1.3x | 22% | SA / SADC |
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Vitalis Group South Africa (Pty) Ltd.