By THE AFRICA BAZAAR Staff Writer
South Africa-based pension-fund manager, Alexander Forbes Equity Holdings Proprietary Ltd. plans to list its shares on Johannesburg Stock Exchange next month, subject to regulatory approvals, the company said on Monday.
It added that at the time of the Initial Public Offering (IPO), it will sell a 14.9 percent stake of its shares to Mercer Africa Ltd., a subsidiary of New York-based Marsh & McLennan Cos., a global insurance broker and risk management firm. An additional 19.1 percent share will go to the company, following regulatory approvals, for a 34 percent total stake in shareholding in Alexander Forbes.
The listing will take place on July 24.
The IPO is not intended to help raise capital for the Alexander Forbes, the company said. Instead, it will allow all existing shareholders to sell their shares in the company in “a structured and orderly opportunity” and reinvest, if they want.
In addition, the listing will allow the company to further pursue its strategic growth path that it set in 2010.
“We are proud to announce that, following the evaluation of various strategic options for the group, we are progressing with a listing, which will enhance our profile, provide a realization event for our existing shareholders and grant us access to the capital markets as well as help us attract and retain key staff,” Edward Kieswetter, Alexander Forbes Group chief executive said in a statement.
Kieswetter added that the deal will give Mercer the opportunity to access South African markets and provide a gateway to other regions on the continent through its partnership with Alexander Forbes. Mercer also expects that the investment will help support its own global clients to expand and succeed in Africa, which it views as particularly relevant given the increasing level of global companies developing, investing and expanding into Africa.
Mercer will be represented on Alexander Forbes’ board of directors, contributing its strategic expertise and global perspective in the areas of health, retirement, and investments.
Further, the company said Mercer will be able to provide services to Alexander Forbes’ clients currently operating outside of Africa or assist those with expansion aspirations beyond Africa, resulting in added economic growth, and opportunities across the group’s businesses that create a greater-value company once the deal is completed.
Discussing the deal, Mercer President and Chief Executive Officer Julio A. Portalatin told The Africa Bazaar his company was attracted to the deal because of Alexander Forbes’ significant base market presence in South Africa and key focus countries in Botswana, Kenya, and Namibia with operations also in Nigeria, Zambia, and Uganda.
“Mercer has a great interest in expanding our investment in Africa,” said Portalatin. “This strategic investment by Mercer with Alexander Forbes expands [our] presence and is evidence of our commitment to Africa.”
From Mercer’s perspective, all presenting opportunities for profitable growth. In 2013, for example, Mercer acquired South Africa-based leading compensation and benefits survey data and information provider, Global Remuneration Solutions (Pty) Ltd, to provide a range of rewards and mobility products and consulting services to local and international organizations operating in sub-Saharan Africa.
“Mercer expects that this investment will support our mutual global clients who wish to expand and succeed in Africa and for Alexander Forbes clients, outside of Africa,” said Portalatin. “Mercer sees strengthening its ability to deliver services in Africa as particularly relevant given the increasing regional economic growth not only as global companies show interest in developing, investing, and expanding into Africa but also as local companies in Africa have increasing need for Mercer’s services. We look forward to supporting Alexander Forbes and its customers as they look to expand globally.”
Deutsche Securities and Rand Merchant Bank, a division of FirstRand Bank Limited (RMB) will act as joint transaction sponsors for the listing. Deutsche Bank AG (London Branch), Morgan Stanley & Co. International plc, and RMB have been chosen to represent the company as joint global coordinators and joint book runners in relation to the offer.
Alexander Forbes was previously listed on JSE in 1996, but delisted in 2007 as part of a $1.2bn leveraged buyout by private equity investors, Actis LLP and Ethos Private Equity.
Alexander Forbes said it is considering setting a dividend policy in a range between 1.5x and 2.0x earnings cover (corresponding to 50 to 67 percent dividend payout ratio range), with absolute discretion by the board to determine actual dividend declarations. The company also plans to return any excess capital above its capital targets to shareholders in the form of share repurchases and special dividends.
Upon listing, the company will change its name to Alexander Forbes Group Holdings Limited.