Sygnia portfolio gets a boost
Money manager Sygnia has clinched a deal to acquire all of the shares in db X-trackers, Deutsche Bank SA’s exchangetraded funds business. The deal will increase Sygnia’s index-tracking assets under management to R28.2bn.
Money manager Sygnia has clinched a deal to acquire all of the shares in db X-trackers, Deutsche Bank SA’s exchangetraded funds (ETF) business.
The deal will see Sygnia’s index-tracking assets under management rising R11.3bn to R28.2bn. It will pay R325m for db X-trackers, which has five JSE-listed ETFs tracking global market indices.
“We are paying R320m plus R5m for the working capital they [Deutsche Bank] will leave in the business,” said Sygnia CEO Magda Wierzycka.
“The price is based on the after-tax profits of the business, which were R38.1m for the 12 months to December 31 2016.”
Sygnia plans to use a Nedbank bridge facility to cover R320m of the price, with the rest funded internally. It then plans to launch a rights offer to settle the bridge facility once suspensive conditions have been met and it emerges from a closed period. The conditions include approval by the competition authorities and the Financial Services Board. The deal is expected to close by August 31 2017.
Wierzycka said Sygnia’s after-tax profit for the year to September 2016 was R72.3m, so the deal with Deutsche Bank would add 50%.
“Once we strip out one-off items and internal cost adjustments, we are buying the company at a historical price-toearnings ratio of 10, which is very reasonable for what is a very unique product range.”
db X-trackers began with the listing of two ETFs on the JSE in October 2005. Deutsche said it was selling db X-trackers as part of its global strategy to focus on core areas.
“We remain committed to SA and our investment banking franchise,” said Muneer Ismail, the CEO of Deutsche Bank SA.
Wierzycka said db X-trackers’ offer was particularly attractive now due to the strong rand. She said Sygnia might make other similar acquisitions, but planned to launch its own funds indexing global bonds and listed property.