Motsepe's ARC gets stake in Alexander Forbes

Cape Town - African Rainbow Capital (ARC), chaired by billionaire Patrice Motsepe, will acquire a 10% stake in financial services company Alexander Forbes [JSE:AFH] in a strategic empowerment deal.

Motsepe, started ARC, a wholly-owned subsidiary of Ubuntu-Botho Investments, as part of a plan to build a financial-services company controlled by black people, through being Sanlam Limited’s empowerment partner.

The JSE-listed Alexander Forbes said shareholders approved ARC's acquisition in its African operations, with net proceeds of R678.1m to be settled in cash. The total cash consideration of the transaction amounts to R753.45m.

Johan van Zyl, the co-CEO of ARC welcomed the approval of the transaction. He described it as a landmark investment by ARC which has a 10- to 20-year vision to build a South African base and expand into the rest of Africa.

“For us, investing in Alexander Forbes is key to executing on that vision since the group is a recognised market leader in South Africa and selected markets in Africa,” he said.

Alexander Forbes group chief executive Andrew Darfoor said the overwhelming support for the deal demonstrates that its shareholders believe in the strategic merit and industrial logic of having ARC as a strategic investor to partner with the group in the delivery of its ambition of building a leading pan-African financial services company.

"Going forward, the focus will be on conducting extensive market segmentation and research to better enable us to create solutions that address our customer needs throughout their life journey across retirement, financial planning, wealth creation and protection, and financial risk management," he explained.

The financial services group announced in November that it recorded a profit of R416m for the six months ended 30 September 2016. Operating profit at R574m was up 4% compared to the previous period. Headline earnings per share were up 4% to 27 per share. An interim dividend of 17c was declared, up 13% from the six months ended in September 2015.

With a market cap of R9.71bn, Alexander Forbes shares closed at R7.24 on the JSE on Friday.