Alexander Forbes delays share buyback over market volatility
Move will strengthen group’s capital as well as liquidity, and ensure its sustainability in next months, group says
Financial services group Alexander Forbes Holdings will postpone buying some R1bn in shares from its largest shareholder, Mercer Africa, due to market volatility caused by the coronavirus outbreak.
The decision not to proceed with the share buyback now will strengthen the group’s capital and liquidity position, “and ensure its robust sustainability through the difficult economic conditions expected over the forthcoming months”, Alexander Forbes said.
The group said in January that its largest shareholder — Mercer Africa, which owns a 34% stake — intended to dispose of almost its entire investment of 442.8-million shares in Alexander Forbes Group Holdings.
Alexander Forbes would buy about 200-million shares owned by Mercer at R5.15 per share, while African Rainbow Capital would purchase R193-million in shares, it said at the time. The latter transaction is still subject to regulatory approvals and is expected to be completed in about four weeks.
“As a result of the global economic turmoil caused by the Covid-19 pandemic, there has been a material change in market conditions and outlook and it is impossible to determine for how long this uncertainty will persist,” the statement reads.
The parties had agreed to consider a possible repurchase of the shares at a later date, the group said.
The share price of Alexander Forbes has fallen by more than a third so far in 2020, while the JSE has fallen about 29%.