RMBH off­loads short-term in­surer

A lit­tle known pri­vate in­vest­ment en­tity pays 54% pre­mium for Glen­rand MIB

Finweek English Edition - - Companies & Markets -

IN­CREAS­ING AC­TIV­ITY ON the JSE by direc­tors of listed com­pa­nies shows they’re slowly mak­ing their way back to the mar­kets fol­low­ing the year-end hol­i­days. Whereas the past few weeks each saw only a hand­ful of trades de­clared, the past week recorded 25 deals in which R57,4m changed hands. The re­sult was net sales of R400 000.

The over­all con­sid­er­a­tion was boosted by the R43m sale of RMB Hold­ings’ 12,3% in­ter­est in short-term in­surer Glen­rand MIB to Trus­tee Board In­vest­ments (TBI). RMB Hold­ings in­formed share­hold­ers dur­ing its 2007/2008 fi­nan­cial year it no longer re­garded its stake in the risk ad­vi­sory and short­term in­surer a core as­set and that it would there­fore be dis­posed of.

Last week RMB Hold­ings reached an agree­ment with TBI, in which the lat­ter agreed to buy the 36m shares at 120c/share – a 54% pre­mium on the vol­ume weighted av­er­age price (VWAP) in the pre­ced­ing 30 trad­ing days to 16 Jan­uary. “That price was set af­ter tak­ing due con­sid­er­a­tion of the size of the hold­ing be­ing sold,” says RMB Hold­ings in a joint state­ment with TBI and Glen­rand MIB CE An­drew Chislett. The state­ment adds it ex­ceeds Glen­rand MIB’s VWAP of 118c last year.

The state­ment says TBI be­comes Glen­rand MIB’s largest share­holder, with just over 21% of the shares (pre­vi­ously it owned 9% while the com­pany’s 2008 an­nual re­port shows TBI held 7,6% or 22m shares). TBI is a 16-year-old pri­vate in­vest­ment com­pany man­aged by three direc­tors (all char­tered ac­coun­tants). Chair­man Abrie du Preez wouldn’t com­ment on the com­pany’s other in­vest­ments, cit­ing con­fi­den­tial­ity agree­ments with in­vestee com­pa­nies. Among its listed as­sets is a 1,37% share­hold­ing in Mer­can­tile Bank and 14,6% of Beige Hold­ings.

Du Preez says TBI bought into Glen­rand MIB be­cause it’s a “very good old brand” and for its good re­la­tion­ship with clients. “We be­lieve it’s sub­stan­tially un­der­val­ued, oth­er­wise we wouldn’t have bought the shares,” Du Preez com­mented on the pre­mium TBI paid for the 36m shares. TBI says it fo­cuses on long-term in­vest­ments in un­der­val­ued com­pa­nies and its 50 share­hold­ers and the direc­tors “have spe­cific ex­pe­ri­ence in short­term in­sur­ance and busi­ness de­vel­op­ment in the fi­nan­cial ser­vices in­dus­tries”. The com­pany says it has re­alised com­pound an­nual re­turn on in­vest­ment of 32,3% since 1992.

The deal hap­pened af­ter Glen­rand MIB com­pleted its re­struc­tur­ing into a risk ad­vi­sory busi­ness with its core in­ter­ests in short-term in­sur­ance broking and pol­icy ad­min­is­tra­tion.

A large por­tion of the re­main­ing R14m worth of deals last week came from some of mi­crolen­der African Bank In­vest­ments Lim­ited’s (Abil) direc­tors, who in­vested a col­lec­tive R4,6m in the com­pany’s sec­ond black eco­nomic empowerment pro­gramme. The Ma­songe of­fer closed in Novem­ber 2008 with 12 800 applications for the heav­ily dis­counted shares worth R74m in Ma­songe In­vest­ment Hold­ings (which will be con­verted on a one-for-one ba­sis to Abil at the end of the in­vest­ment pe­riod in 2015). “Ma­songe has utilised the pro­ceeds from the pub­lic of­fer and pur­chased a to­tal of 2,4m Abil shares through the mar­ket at an av­er­age price of 2625c/share,” says Abil in a state­ment.

Ex­ec­u­tive di­rec­tor Tami Sokutu led three non-ex­ec­u­tive col­leagues with a R2m in­vest­ment (at the Abil em­ployee price of 364c/ share), fol­lowed closely by Mutle Mo­gase

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