Durban - Leading Pan-African financial services group Alexander Forbes is looking at diversifying its portfolio to create more value for its shareholders. In line with this focus yesterday it made a strategic acquisition of African Actuarial Consultants (AAC) in Zimbabwe for an undisclosed amount.
Previously the group completed two significant transactions in 2016; firstly it sold its 60 percent interest in the UK-based consulting business, Lane Clark & Peacock, for R1.3 billion. The second transaction saw African Rainbow Capital acquiring a 10 percent shareholding in Alexander Forbes, a wholly-owned subsidiary of the group, as a strategic empowerment partner.
The group said together these transactions provide capital for investments and acquisitions.
Group chief executive Andrew A Darfoor said AAC gave Alexander Forbes a foothold in the Zimbabwean market, which had significant upside growth potential.
Read also: Alexander Forbes CFO quits
“Working together with AAC, we have a long-term vision to create an energetic, innovative and highly regarded pan-African consulting and actuarial leader that offers end-to-end capabilities to financial schemes and their sponsors both in the private and public sector,” said Darfoor. AAC is one of the largest independent actuarial consultancies in Zimbabwe and Alexander Forbes said the acquisition is subject to regulatory approval.
“The acquisition of AAC is in line with Alexander Forbes’ growth strategy to expand into selected markets in sub-Saharan Africa under the Emerging Markets Division, which already has market leading businesses in Botswana, Namibia, Uganda and Nigeria,” added Darfoor.
AAC started operating in 1993 and it offers end-to-end actuarial and advisory services to leading insurers, reinsurers and large pension schemes in Zimbabwe as well as compensation and medical schemes.
ACC managing director Tinashe Mashoko said the company was delighted to become part of Alexander Forbes, whose market leading position would strengthen AAC’s business and allow it to grow its client base not only in Zimbabwe but in the region as well.
Alexander Forbes has adopted a new strategy themed: Ambition 2022. Through this strategy the group is focusing on helping customers achieve a lifetime of financial well-being and security.
Under Ambition 2022 the group has focused on accelerating its strategy to be a trusted partner for financial solutions for every stage, successfully shifting towards operating as a leaner, more focused group.
In the results for the year to end March, Alexander Forbes said income from continuing operations was marginally up by 1.2 percent to R3.44bn, up from R3.3bn reported a year ago, while net profit for the year increased by 80.1 percent to R1.57bn, up from R874 million.
Headline earnings per share lowered to 53.4cents a share, down from 58.1c in 2016.
The group said the operating environment remained challenging for the financial services sector, with Brexit, the US election and President Donald Trump’s economic policies having a negative impact on the South African economy.
The group declared a final gross cash dividend of 23c a share from income reserves.
Nolwandle Mthombeni, an investment analyst at Mergence Investment Managers, said the big surprise on the results were the growth in the core operations as well as the special dividend.
“When management gave guidance on lower headline earnings than the market expected there were some concerns around performance of the underlying operations. However, there was benign growth across the main segments so that was received positively.”
Alexander Forbes Group shares gained 3.08percent on the JSE on Monday to close at R6.70.