Alexander Forbes selling European interests to focus on growth in Africa
JSE-listed financial services group Alexander Forbes has reached agreement to sell its 60% interest in UK-based consulting business Lane Clark & Peacock LLP and subsidiaries in Ireland and the Netherlands (LCP).
"I concluded earlier this year that our operations outside of Africa were noncore, and that meant LCP," said Alex Forbes CE Andrew Darfoor.
The sale will be to the LCP individual partners and funds managed by Inflexion Private Equity (Inflexion) for £75.4m, which includes £6.4m of profit distribution which will be made in two tranches during 2017-18.
Darfoor said the price was fair and would fund a share repurchase, subject to shareholder approval. They also sought to reinvest anything left over in accelerating growth of the group in Africa.
"The sale of our stake in the LCP business marks further progress in our aggressive pursuit of the simplification of the group … with redeployment of proceeds back into the business. The disposal for cash provides additional funding for the group to pursue acquisitions in line with its communicated strategy, and executing a focused share repurchase programme on receipt of shareholder approval.
"The company remains committed to a 1.5 times dividend cover policy," said Darfoor.
This sale comes after the new CE said the company would accelerate simplification of the group to build a pan-African financial services leader.
The group’s focus has shifted to emerging-market economies. Darfoor said they already had a strong presence in markets such as Botswana, Kenya and Nigeria and would continue to explore growth opportunities in Africa. "In my perspective the group has not delivered on its potential across institutional retail in SA and the rest of Africa."
Alexander Forbes fostered its first strategic partnership in 14 years when Patrice Motsepe’s investment firm African Rainbow Capital secured a 10% stake in the group in September. The black economic empowerment deal, worth R753.4m forms part of its aggressive expansion strategy into new African markets as it works on creating a distinctly African and black-controlled financial services company.
Darfoor said shareholders could expect the company to focus on the African continent and its ability to grow the business. The company’s share price has risen 15% since the beginning of December.