AFRICAN PHOENIX

African Phoenix Investments (API) touched 84c on Monday morning, the highest level since it emerged from the ashes of African Bank Investments business rescue process in May 2016. It then settled at 80c. Investors are evidently excited about the likely outcome of the shareholders’ meeting in early November.

At this stage it looks as though API’s plans for the launch of a private equity fund are set to go up in smoke despite the backing of the Public Investment Corporation (PIC), which holds over 10%. The PIC is keen to see the development of a blackmanaged private equity player.

However, the two major shareholders, Zarclear and Steyn Capital, which hold almost 50%, appear to be in agreement about scuppering the proposal.

In early September Zarclear, which bought 22% of API a month earlier, called for a shareholders’ meeting to vote on terminating the private equity plan. It paid R246m, equivalent to 80c a share, for the stake.

Terminating the scheme only requires an ordinary resolution so it’s difficult, at this stage, to see what could block Zarclear’s plan. If Zarclear is successful it is expected that most of the R1.2bn cash that was to be used for private equity deals will be distributed to shareholders. Now that Stangen has been sold, API’s only other significant asset is an assessed tax loss of about R14bn, which would be very attractive to a profitable financial business.