US-based insurance and investment group Prudential Financial has made Alexforbes’s minority shareholders an offer of R5.05 per share to help lift its stake in the local financial services group to up to 33 percent.
Alexforbes’ share price was 5 percent higher at R4.52 yesterday afternoon. The deal, valued at around R1.9 billion at Alexforbes’ market capitalisation yesterday, will see Prudential becoming the second biggest shareholder of Alexforbes.
African Rainbow Capital, which owns a 41.47 percent stake in Alexforbes, said it would not take part in Prudential’s “partial offer” to shareholders.
Shareholders, who own 100 Alexforbes shares or less, can sell all of their shares to Prudential at the offer price. Those who hold more than 100 shares can sell 100 shares plus 45.2 percent of the rest of their holding.
The partial offer was for 18.2 percent of the Alexforbes shares, while Prudential would be buying a 15 percent stake sold by former minority shareholder Mercer.
The R5.05 offer amount excluded a 20 cents per share final dividend declared in June.
The offer was made by Prudential’s newly created subsidiary called New Veld.
Alexander Forbes said its relationship with Mercer would terminate on the closing date of the Mercer sale agreement, which went unconditional on July 6. Mercer sold a 15 percent stake in Alexander Forbes to ARC Financial Services Investments.
Mercer indicated in January 2020 already its intent to exit its shareholding in the company.
Prudential Financial Africa, India, Indonesia and Business Development regional president Pavan Dhamija said earlier this year the transaction underscored Prudential’s continued focus on Africa as a strategically important growth market and the group’s vision to be a global leader in expanding access to investing, insurance, and retirement security.
“We identified Alexander Forbes as the market leader in South Africa best capable of advancing our vision and strategy,” he said.
Prudential Financial, with more than $1.5 trillion in assets under management as at December 31, has operations in 40 countries in the US, Asia, Europe and Latin America.
In June Alexforbes announced that it had lifted the annual dividend by 45 percent to 32 cents per share after the financial services company continued to make progress on its turnaround strategy.
Operating income increased 7 percent to R3.2 billion in the year to March 31, underpinned by “substantial success” in attracting new clients across all business segments coupled with strong investment performance, CEO Dawie de Villiers said at the time.
There had been R9.4bn in new institutional business assets under management, with R4bn more pending regulatory approvals.
BUSINESS REPORT