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Johannesburg - Minority shareholders in short-term insurer Mutual & Federal (M&F) are satisfied with the R21.25/share that Old Mutual is offering to take over the full interest in M&F.
PSG portfolio manager Jan Mouton says the offer price is 86% more than M&F's net asset value of R11.44, and the funds that M&F has in reserve to pay out claims add another R12.90. This values M&F shares at R24.34.
As a big minority shareholder, PSG is happy with the price.
Mouton says the price offered by Old Mutual is less than the value placed on the shares, and he understands why Old Mutual is now making the offer.
Nevertheless, last week PSG's Tanzanite Flexible Fund took the opportunity to sell all the shares it held in M&F on the open market when the share price rose above the offer price. After the announcement the M&F share price stepped up from just above R18/share to R22 on Friday.
Mouton says the reason why PSG sold the stake was that M&F had suffered an underwriting loss in the recent interim period and during the financial crisis had reduced its exposure to equities.
Its premium income had also declined.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.