FINANCIAL services group Alexander Forbes is in talks to sell a stake in its AfriNet unit to African Rainbow Capital, according to a person familiar with the matter.

African Rainbow Capital, chaired by billionaire Patrice Motsepe, plans to use the AfriNet acquisition to expand its operations outside SA, the person said, asking not to be identified because talks are private.

Motsepe, 54, the richest black South African with a fortune of $1.7bn, started African Rainbow Capital in April with access to as much as R17bn in capital. He plans to build a financial-services company controlled by black people and spanning everything from life insurance and healthcare to money management and banking. AfriNet offers insurance and risk management services in 30 African countries.

African Rainbow Capital co-CEO Johan van Zyl declined to comment, as Alexander Forbes spokesperson Lynn Stevens.

• Profit Growth

Alexander Forbes rose as much as 4.5% before paring gains to trade 2.5% up at R6.66 as of 9.47am in Johannesburg. The shares have gained 15% this year, giving the company a market value of R9bn.

Companies in South Africa have sold stakes to black investors to compensate for discrimination under apartheid, which ended in 1994, with the economy still controlled by the white minority. Alexander Forbes said in March it started talks with a black-owned partner about an investment in the group’s African subsidiaries and said on July 25 the talks were continuing.

In the fiscal year ended March, AfriNet’s profit from operations grew 23% to R74m and its assets increased by more than 9% to R4.33bn, according to Alexander Forbes’ annual report.AfriNet’s contribution to group profit has risen to 6.1% by March from 4.7% two years ago.

Alexander Forbes, which had an initial public offering in 2014 after its private equity owners exited the investment, is 33% held by Marsh & McLennan’s Mercer unit, according to data compiled by Bloomberg.


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