Peregrine’s move on big BEE deal
SOUTH Africa’s largest stockbroker, Peregrine could soon be majority black-owned, and if approved, the nearly R1-billion deal would be a big step forward for transformation in financial services.
On Wednesday Legae Securities and Peregrine Securities announced the formation of a black economic empowerment consortium, which had offered R910-million in cash for a 65% stake in Peregrine Securities, currently held by Peregrine Holdings.
Management at Peregrine Securities would retain its 35% stake in the business.
The deal would be a considerable win for transformation in stockbroking, and by implication asset management, in the country, particularly given the considerable size of Peregrine Securities.
Its equities division was ranked the biggest trading service provider by volume and value on the JSE’s equities market for the five months to May, executing trades in excess of R552-billion, JSE figures show.
This puts it ahead of rivals Citigroup, JP Morgan Equities SA, RMB Morgan Stanley, Investec Securities and SBG Securities.
Last year Peregrine Equities processed trades of R1.1trillion, second only to RMB Morgan Stanley at R1.3trillion – roughly a quarter of SA’s GDP.
“There have been many black entrants to the country’s financial services market, but as a collective the group’s annual share of JSE value traded was less than 5% in 2017,” said Fatima Vawda, chairwoman of Legae Securities and managing director of 27Four Investment Managers. 27Four publishes an annual survey, BEE.conomics, tracking transformation in the asset management industry.
Its most recent survey found that black-owned fund managers managed just 9% of SA’s R4.6-trillion privatelymanaged savings and investment assets.
Legae Securities became the first black-owned and managed stockbroking firm registered with the JSE in 1996. If successful, the deal would merge the two businesses under the name Legae Peresec.
“The sale follows our strategy of being in low-capital, high-dividend and high-return-on-equity businesses,” chief executive of Peregrine Holdings, Robert Katz, said. Peregrine’s share leapt 5.95% to close at R21.18, suggesting that the sale, which rounds out a right-sizing of the group, could prompt a rerating in the stock. Allan Gray was among the buyers and now holds just over 10% of the company. Founders, management and staff hold 20.42%.