Alexander Forbes to take lessons from private consortium
South Africa’s Alexander Forbes says that it learned many valuable lessons during its time as a private equity consortium.
“The dynamics do change. The dynamic during the private equity consortium, which was beneficial to us – the close involvement of your shareholder through a private equity holding, has sharpened [us] in terms of stronger buys for executions, clarity of intent, managing our cash,” Alexander Forbes chief executive Edward Kieswetter told CNBC Africa.
“Those disciplines made us fitter and stronger and we’re under no illusion that in a listed environment, where we have other shareholders, we would have accountability to them. We will take the lessons learned out of being private.”
Alexander Forbes, which plans to list on the Johannesburg Stock Exchange (JSE) in July following its delisting from the JSE seven years ago, indicated that it had considered a number of options before choosing to relist.
“The delisting in 2007 was as a result of the private equity consortium. Now, we had to find an orderly way for the current shareholders to exit their investment and when the board mandated me to start the process, it was to consider all options,” Kieswetter said.
“We considered everything from a straightforward traded sale by a local or international player through to a listing. Where we found ourselves, as a result of having gone through the process, is the best of both worlds where we get the benefit of a long-term investor and we give South African and international asset managers an opportunity to invest into a great company.”
Kieswetter also indicated that Mercer’s acquisition of a 34 per cent stake in Alexander Forbes is a vote of confidence in both the organisation and in South Africa as an investment destination.
“The organisation that we’re aligning with through this investment is Mercer. There’s an entity called Mercer Africa. They’re not very big which is why their investment in Alexander Forbes creates a wonderful platform for them to accelerate their interests in Africa,” he said.
“For Mercer, it’s the attraction of emerging markets through a company that is well-reputed and established. For us, it gives us access through the institutional investment into their global footprint, which enhances our value proposition to our clients.”