Alexander Forbes surges to R10.5bn valuation

Alexander Forbes surges to R10.5bn valuation

2014-07-24 20:15

Johannesburg - Shares in Alexander Forbes surged 12% on their return to the Johannesburg bourse on Thursday, valuing the retirement fund manager at almost R10,5bn as it dazzled investors with the prospect of steady earnings and growth across Africa.

The company, which was taken private by a group of investors led by buyout firm Actis in 2007, returned to the bourse after a R3.7bn public offering last week, South Africa's largest flotation in four years.

Investors were drawn by the regular income from its pension management and insurance businesses, and the potential for growth in sub-Saharan Africa where financial services are still developing.

“It’s a solid company that’s making decent profit on a regular basis and it has sizeable assets under its management,” said Petri Redelinghys, a trader at Inkunzi Investments in Johannesburg.

“I’m actually a buyer of the stock, but it’s run so hard so quickly that I think a little bit of patience might be the way to go.”

67% dividend pay out

Alexander Forbes said it may pay out as much as 67% of its earnings as dividends.

The shares first traded at R8.10, compared with the initial public offer (IPO) price of R7.50. By 13:00 the shares were trading at R8.40, valuing the firm at nearly R11bn.

The price is around 11 times the firm’s trading profit per share for the 2014 financial year, according to Reuters calculations.

Alexander Forbes said this month it was looking to expand its presence in sub-Saharan Africa. It already provides retirement planning and insurance services in several African countries such as Namibia, Botswana, Kenya and Nigeria.

Marsh & McLennan's 34%

Following the listing, Marsh & McLennan, the world’s top insurance broker, is due to become Alexander Forbes’ biggest shareholder with a 34% stake.

Marsh is due to buy the stake in two tranches starting with 14.9% at the listing and the rest shortly after.

The listing follows the biggest Johannesburg flotation since Royal Bafokeng Platinum’s 2010 IPO, according to Thomson Reuters data.

IPO record

In dollar terms, Alexander Forbes’ public offering is South Africa’s seventh-largest IPO on record. It also allowed a group of investors led by London-based private equity firm Actis to exit the company in a buoyant market.

The Actis-led group took the company private in an R8.2bn deal seven years ago, just before the global financial crisis. Since then, the South African equity market has recovered to post a chain of record highs this year.

  • Ike Jakson - 2014-07-25 00:15

    Well. 10 trillion is a lot of money in any currency but if anyone can steal it, with a bit of patience and the modern hi-tech computers, this lot surely can; they are old hands and won’t have to worry about the little FSB messing them around. They know all the ropes, having been there before.

  • Mike Immelman - 2014-07-25 08:47

    I know some public figures don't understand the difference between 1M,1B and 1T but I would expect better from financially literate journalists.

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