JSE-listed PBT Group is buying out investment management and stock broking firm Prescient Holdings in a R1.6 billion deal that will result in a reverse takeover of PBT.
PBT's recent listing, making it the latest ICT stock to join the bourse, took place last year when the company used retail has-been Wooltru to reverse list onto the JSE.
Until the end of the 1990s, Wooltru was SA's largest retailer and owned Massmart, Woolworths, CNA and Truworths. Apart from CNA, now owned by Edcon, all the other companies have separate JSE listings.
Yesterday, the company issued an announcement indicating it would buy Prescient Holdings, Prescient Capital, Stadia Fund Management and 75% of Greenfield Institute of Business Limited, resulting in a reverse takeover, and the renewal of its cautionary announcement.
PBT will acquire Prescient for R1.59 billion, which it will pay for through the issue of additional shares at R1.35 each. The company's stock closed 8c, or 5.71% higher, at R1.48, yesterday after the announcement.
Prescient chairman Herman Steyn says PBT started out as a Prescient unit called Prescient Business Technologies and was spun out as a separate entity towards the end of 2003. He says the reverse takeover will bring “the whole lot together again”.
Once the deal has been completed, Prescient shareholders will own about 80% of the listed entity, which will move to the financial services board as about 80% of its business will come from financial services, says Steyn.
ICT company PBT has two subsidiaries: PBT Technology Services and PBT Infosight. It also owns all of Stricklands Tetra Cape and 51% of PBT Insurance Technologies. PBT plays in the business intelligence and information management space, and has clients in SA and Australia.
PBT says the deal will provide opportunities to expand its earnings potential, achieve greater liquidity on the JSE, and create opportunities to raise capital on the bourse.
Prescient was founded in 1998 as an investment management firm and launched its stock broking business the following year. Management and staff own 76.8% of the company, and it is 29% empowered.
At the end of August, its Prescient Investment Management unit was managing R86.8 billion worth in assets, while its Prescient Administration Services business was administering an additional R6.2 billion.
The deal is subject to several conditions, but is expected to be completed by early January at the latest. Shareholders representing 80.58% of PBT shares that can be voted have irrevocably undertaken to vote in favour of the deal.
Absa Investments analyst Chris Gilmour says: “On the face of it, the deal seems bizarre, but there is a profound strategic intent involved here.” He adds that such a deal is not unique, as a similar reverse takeover involving financial services and a seemingly unrelated company took place in the 1990s.
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