Alexander Forbes optimistic Mercer will boost stake
Alexander Forbes Group Holdings, Africa’s largest independent retirement-fund administrator, said it’s optimistic Marsh & McLennan Cos.’s Mercer unit will boost its stake to 34% before year end.
Mercer bought 14.9% at the time of the Johannesburg- based company’s initial public offering on July 24. According to irrevocable agreements, it is meant to take up an additional 19.1% of Alex Forbes, as it’s known.
“Mercer is in the process of getting approval from the Financial Services Board,” Edward Kieswetter, chief executive officer of Alex Forbes, said by phone from Johannesburg today. “We are optimistic that there’s no reason to drag the approval process beyond year end.”
Alexander Forbes was bought by a private-equity consortium for R8.2 billion in 2007. While it delisted at the time, preference shares were set up so that institutional investors could participate in the company.
To prepare for the private-equity shareholders to exit their investment, the company returned to Johannesburg’s stock exchange in July. Trading in the preference shares was suspended today, the deadline for their unbundling.
“This is the transaction that dissolves the preference share vehicle and places ordinary shares in preference shareholders’s hands -- it’s in process as we speak,” Kieswetter said. “It means we have effectively moved to a free float of 66% with 34% held between the private- equity shareholders and Mercer.”
Mercer, once it has approvals, will increase its stake by buying from existing shareholders and Alex Forbes’s management’s share trust, he said. Since the stock started trading, no other insurers have approached Alex Forbes to take a large stake in the company, he added.
The insurer won’t update the market next week on any changes in its share register after the unbundling of the preference shares. The next statement on the matter will probably be made when Mercer has regulatory approval to increase its holding to 34%, Kieswetter said.
Alex Forbes has risen 14% since its listing on July 24. It rose 0.5% to R8.54 as of 2:28 p.m. in Johannesburg trading.