Alexander Forbes today announced that it has signed heads of agreement to sell 30% of its SA business to an empowerment company controlled by Millennium Consolidated Investments (MCI). The other shareholders in the empowerment company will include a broad-based empowerment trust.
MCI is a black economic empowerment investment company headed by Cyril Ramaphosa. Other shareholders of MCI include James Motlatsi, executive directors Ndoda Madalane and Kodwo Mills, as well as other business professionals and two community trusts representing beneficiaries from historically disadvantaged groups.
Cyril Ramaphosa joins the board of Alexander Forbes and will also serve as non-executive chairman of its SA holding company.
The transaction is to be fully vendor financed by Alexander Forbes. According to Alexander Forbes Group chief executive, Graeme Kerrigan, the vendor finance structure is designed to facilitate the long-term participation of MCI and other empowerment shareholders in the SA business of Alexander Forbes. MCI will also assist Alexander Forbes with its internal transformation from an empowerment perspective.
Kerrigan added: "This transaction is an important strategic step for our South African business. It provides us with the right partner to transform our business and expand into wider markets. We are delighted to have secured MCI as our lead empowerment shareholder and anticipate substantial added value and growth to our South African business."
MCI Chairman, Cyril Ramaphosa commented: "We are excited about having concluded this transaction with a company of the size and calibre of Alexander Forbes. There is a good fit between our management teams and we look forward to working closely with them to develop and grow Alexander Forbes` business."
Investment Solutions, South Africa`s largest multi-manager in which Alexander Forbes holds a 60% controlling interest, has been included in the empowerment transaction. In order to facilitate this, Alexander Forbes proposes to buy out the minority shareholders in Investment Solutions.
This avoids a dilution of Alexander Forbes` interest in Investment Solutions from 60% to 42%, which would represent an unacceptable level of economic interest in this fast growing subsidiary.
According to Kerrigan, the two transactions effectively represent the substitution of a 30% empowerment shareholding for the current 40% minority shareholding in Investment Solutions South African business, with Investment Solutions International business being 100% owned by Alexander Forbes.
Further details of the above transactions are provided in the attached statutory announcement to Alexander Forbes shareholders. Details of an acquisition made in the United Kingdom are provided in a separate Press Release.
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