Mercer to buy Alexander Forbes stake
EMPLOYEE benefits specialist Alexander Forbes said on Monday Mercer, a subsidiary of Marsh & McLennan, had agreed to acquire 34% of the group, an investment that would give Mercer an opportunity to broaden its exposure in sub-Saharan African markets.
Marsh & McLennan is a US multinational professional services, risk management, and insurance brokerage firm
Mercer will initially acquire a 14.9% stake at the time of the Alexander Forbes listing, scheduled for July 24. Mercer will then acquire a further 19.1% at a price linked to the offer price, subject to regulatory approvals.
Coronation chief investment officer Karl Leinberger said his firm was interested in Alexander Forbes’s listing, but this would depend on the market price.
The Public Investment Corporation has not commented yet.
Between now and July 20, Alexander Forbes CEO Edward Kieswetter and chief financial officer Deon Viljoen will visit local and foreign institutional investors. Mr Kieswetter said Alexander Forbes had reached an agreement with Mercer only and would engage with other institutional investors in due course. The investor road shows will not target retail investors.
The agreement with Mercer and the planned listing mean all existing shareholders ”” including private equity players Actis, Ethos, the Shanduka black economic empowerment vehicle, management and staff trusts ”” must exit their investment and consider fresh investments if they are interested in the listed entity.
Alexander Forbes may have to find new black economic empowerment partners. The group will also have to appoint new directors as the board representatives from the exiting shareholders are expected to step down.
However, it is expected that Mr Kieswetter, Mr Viljoen and chairman Sello Moloko will stay on as directors, allowing for continuity, Mr Kieswetter said.
Commenting on the investment on Monday, Mercer president and CEO Julio Portalatin said: "This is the beginning of a strong partnership that will generate value for both of our firms and our respective clients. We are particularly excited to significantly broaden our exposure to the growth prospects present in South Africa and sub-Saharan Africa."