Liberty with R1bn war chest seeks acquisitions in Africa

LIBERTY Holdings had more than R1 billion to make acquisitions in Africa and planned to raise more funds if needed, the insurer controlled by Standard Bank Group said.

“We intend to raise capital for large acquisitions, so if a big one lands then we’ll probably do a combination of debt and equity,” Thabo Dloti, the head of the Johannesburg-based insurer, said yesterday.

“The big issue is bolstering our East African businesses. We also need sizable businesses in West Africa – we need insurance and we also need asset management in Nigeria.”

Liberty, South Africa’s fourth-largest insurer, has followed parent Standard Bank into the rest of Africa to hunt for growth as domestic opportunities wane.

The company bought Standard Bank Investment Management Services Ghana in Octo- ber, giving it a presence in more than 15 African countries, and might conclude a Nigerian insurance deal by the end of March, according to Dloti.

Liberty’s net income for 2014 rose less than 1 percent to R3.92bn from R3.91bn a year earlier, the insurer said.

Investment returns declined, margins on new business fell and earnings per share excluding one-time items declined 3 percent to R13.92.

The stock advanced by 3.03 percent to R140.81 at the 5pm close in Johannesburg trading. It was the biggest gainer among the six members of the life assurance index.

“Stanlib suffered from the negative sentiment to money market funds following the African Bank Investments Limited (Abil) failure, as well as investor trends to higher-risk asset classes,” Liberty said, referring to the company’s asset management unit.

“This contributed to net withdrawals of R13.7bn from the various Stanlib money market funds.”

Abil failed in August, dealing a blow to many asset managers’ money-market funds. While the Reserve Bank crafted a rescue plan for Abil, the lender has delayed any plans for an initial public offering. This means that Stanlib and other asset managers are stuck holding assets that cannot be traded until there is a resolution on Abil’s future. Liberty’s directors “hit most of their key performance indicators” and would be getting bonuses, Dloti said. He had said that the payouts might be less than for 2013.

The insurer will pay a final dividend of R4.02 per share, an increase of 9 percent.

“Our established track record of exceeding our targeted return on group equity value gives us confidence that we can continue to sustainably grow the business.”