IRISH Life has a made a significant move to increase the business handled by its Irish Life International (ILI) joint venture, by bringing in one of the biggest South African insurance companies as a shareholder in ILI.

Under the terms of the deal, Fedsure - the sixth largest life assurance group in South Africa with over a million customers and £3 billion in funds - will take an initial 25 per cent of Irish Life International, with an option to increase this stake to 40 per cent in four years time.

Irish Life International was set up in late 1994, with Irish Life holding 65 per cent and Anvil Holdings owning 35 per cent. Anvil is a private investment company headed by Monty Hilkowitz, who is chairman of Irish Life International and a main board director of Irish Life.

The joint venture was set up to market life assurance and investment products to international investors and sold £14.3 million in 1995 followed by £48 million sales last year. Most of the sales have come in the UK and South Africa, where ILI has been able to capitalise on Mr Hilkowitz's local connections.

The main reason for bringing in Fedsure is the further easing of exchange controls from the beginning of July. This will allow South Africans to invest money outside the country for the first time. The Irish Life spokesman said that ILI lacked distribution in South Africa to market its products and that Fedsure can now provide this network.

Fedsure, in turn, needed a company to develop insurance and investment products for its local market and ILI is filling this need. "This means that both companies can benefit while Irish Life can also benefit by Fedsure investing some of its funds under management through ILI," the Irish Life spokesman added.

Fedsure is purchasing 20 per cent of ILI from Anvil and is also buying a further 66,666 new shares being issued by ILI. Following the deal, Irish Life's stake in ILI will fall from 65 per cent to 61 per cent while the Anvil stake will fall from 35 per cent to 14 per cent.

A spokesman for Irish Life would not give any of the financial details involved in the deal and was unable to say how Fedsure would increase its stake to 40 per cent in four years time, whether this will be done through buying more shares from Irish Life and Anvil or whether new shares would be issued.

Fedsure chief executive Mr Arnold Basserabie said: "As exchange controls regulations are loosened in South Africa both for institutional investors and for individuals it is important to have partners abroad with whom we can bring new products and investment management skills to the market place.

ILI chief executive Mr Vincent Patterson said: "We have always seen institutional partnerships as a driver of our development. Fedsure's expertise in South Africa... will greatly enhance our development."

As part of the partnership, ILI plans to introduce a new mutual fund product which will offer specific fund management capacity to Fedsure's customers and distributors.