A new look Alexander Forbes
It’s a far leaner operation than it was seven years ago.
If Alexander Forbes re-lists on the JSE later this year, it will return a very different company to the one that was bought by a private equity consortium in 2007. Over the last year, the consortium led by Actis and Ethos has made it clear that it intends to exit its investment in the coming months, having seen through some radical changes.
Since the appointment of Edward Kieswetter as chief executive in 2010, the group has made a major push towards focusing on its essential operations and selling off non-core businesses. Over the last two years in particular, Alexander Forbes has chiseled itself down into a leaner, more focused entity.
In 2012 it sold Alexander Forbes Consultants and Actuaries UK, as well as Investment Solutions UK in two moves that significantly cut back its exposure to the British market. It also parted with its corporate insurance broker, Alexander Forbes Risk Services.
Its cell captive insurance business Guardrisk was disposed of in November 2013 in a deal with MMI Holdings. And at the end of last year it sold its 60% of the Swiss unit of actuarial business Lance Clark & Peacock (LCP) and noted that it would consider offers for the remaining LCP operations in England, Ireland, Belgium and the Netherlands.
The new Alexander Forbes
The group's primary strength remains the institutional market, where it is the largest pension fund administrator in South Africa. It has benefited hugely from many employers closing in-house pension funds in favour of umbrella solutions.
Its multi-manager asset management business, Investment Solutions, provides many of the products used in these retirement funds, but also serves other institutional investors. At the end of September, its total assets under management sat at R262 billion.
The next major push for Alexander Forbes will be to grow the footprint of these financial services and asset management businesses in the retail market. It already has an extensive presence in this space through its financial and health consultants, and will likely leverage off this to bring in more individual business.
The group also sees potential in the rest of Africa. The AfriNet business is a network of locally staffed and autonomous offices in eleven countries that benefit from access to the group's extensive resources. It is primarily active in Namibia and Botswana, but is reaching into the growing markets in Nigeria and East Africa.
The potential for re-listing
Although the potential re-listing of the group could be enticing for investors if it happens at the right price, this may not be the preferred option for the private equity consortium. It's likely that they would prefer a trade sale.
Given the size of the Alexander Forbes business however, it's unlikely that the competition authorities would agree to a merger with a fellow South African life insurer. Which means that if it were to go this route, the most likely sale would be to a multinational looking for an African footprint.