Directors to fund slice of card stake

Discovery says some of its directors, including CEO Adrian Gore, plan to partially fund the group’s R1.85bn acquisition of FirstRand’s stake in its credit card venture.

Discovery says that some of its directors, including CEO Adrian Gore, plan to partially fund the group’s R1.85bn acquisition of FirstRand’s stake in its credit card venture.

The medical insurance administrator said in September it would acquire full control of Discovery Card by buying out FirstRand’s 25% stake.

Under the agreement, it will buy FirstRand’s interest in Discovery Bank, the remaining 25% stake that FirstRand has in the card joint venture, and all rights to the Discovery Card book.

Discovery said on Thursday it had launched a R1.85bn share sale to fund the deal.

Rand Merchant Insurance Holdings, which already owns 25% of Discovery’s ordinary shares, would apply for up to R464m worth of the new shares based on the clearing price of the bookbuild, Discovery said.

Certain directors of Discovery, including Gore, Barry Swartzberg and Herschel Mayers, who collectively own 13% of Discovery, had agreed to subscribe for R240m of shares between them, it said.

Rand Merchant Bank, a division of FirstRand, and Morgan Stanley, are acting as joint bookrunners for the placement, which opened on Thursday and will close “as soon as possible”.

Discovery said it will not issue or sell any more of its ordinary shares for 90 days. The group said in September its “bank-build is progressing well and remains within budget, and the launch is expected before the end of 2018”.

The medical scheme company said in its annual report this week that its remuneration committee approved bonuses worth R366.6m for directors and management incentive schemes, a 33% increase from a year before. “This increase is due to the profit pool paying out at 98% of target in the financial year 2018, versus only 69% target in the financial year 2017,” said chair of the committee, Sonja de Bruyn Sebotsa.