Actis prefers to sell Alexander Forbes than listing

Published Oct 4, 2013

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Kamlesh Bhuckory and Renee Bonorchis

ACTIS would prefer to sell its stake in pension fund manager Alexander Forbes to another company rather than list the shares on a stock market, the private equity firm said.

“Our preference in most instances is a strategic sale,” Actis’s head of Africa, John van Wyk, said in an interview in Johannesburg last week. “This usually translates into a better understanding of value and better pricing on a sale.”

Actis led an R8.2 billion buy-out of Alexander Forbes in 2007 as part of a group that included Ethos Private Equity and Canadian fund managers Caisse de Depot et Placement du Quebec and the Ontario Teachers Pension Plan. There was a “process under way” that could lead to Actis’s exit 12 months from now, Van Wyk said, with both a sale and an initial public offering (IPO) being considered.

Alexander Forbes chief executive Edward Kieswetter said on September 2 that the company was planning an IPO after June as the private equity shareholders sought to exit. “I am following a board mandate to prepare for an IPO which has the backing of the whole board, including Actis and Ethos,” Kieswetter said yesterday.

“A trade sale is a clean exit while a listing may have a lock-up period. The board will choose the option that unlocks the most value.”

The company said in June that it had hired Deutsche Bank and Rand Merchant Bank to advise on an IPO. Alexander Forbes had had “all kinds of interest” from potential buyers over the past four years, Kieswetter said. “We are getting a sense of interest in the market and strategic buyers.”

Actis had three Africa-focused private equity funds and was raising cash for a fourth, Van Wyk said. The UK-based company had raised more than $2bn (R20bn) across Africa funds since 2003, including ventures focused on property and agribusiness, he said.

The company preferred to keep investments for three to seven years, he said.

The most recent private equity fund makes investments in African companies of an average of $100m, according to Van Wyk, with the target ranging from $50m to $250m. “Over the years, deal size has become significantly larger.”

Actis, which also invests in Asia and Latin America, is interested in companies able to tap into increased urbanisation in Africa as well as rising consumer spending.

The private equity firm agreed to buy South African ATM operator Paycorp for R937m in August and invested $244m in Egypt’s Commercial International Bank in 2009.

The company had proposed an offer for drug maker Adcock Ingram earlier this year, sources said in August. Adcock has since agreed to be bought by Chilean drug maker CFR Pharmaceuticals in a R12.6bn deal. – Bloomberg

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