Cadiz boss bids for African Bank shares

African Bank head offices in Midrand.photo by Simphiwe Mbokazi 453

African Bank head offices in Midrand.photo by Simphiwe Mbokazi 453

Published Nov 27, 2014

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Johannesburg - Frank Cadiz, co-chief executive officer of Cadiz Asset Management, said he’s offering 5 rand for preference shares in African Bank Investments in a bid to recoup losses he incurred when the lender collapsed.

That represents a 36 percent discount on 7.80 rand, the price on August 8 before Abil failed.

Cadiz started Deep Value Investments (Pty) Ltd in September and has made the offer to all preference shareholders to test the market, he said.

No one has yet sold their holdings to him.

“I was invested in a lot of Cadiz funds with exposure to Abil,” Cadiz said in a phone interview from Cape Town today.

“I’m doing this in my personal capacity. My company is not involved. Preference shareholders will be compensated ahead of ordinary shareholders” if a proposed initial public offering of Abil’s viable assets next year proves successful, he said.

Abil had 13.5 million preference shares trading on Johannesburg’s stock exchange until all its securities were suspended on August 11.

The South African Reserve Bank, which stepped in with a rescue plan on August 10, said the holders of preference shares may lose their capital.

It arranged for six lenders and the Public Investment Corporation to raise 10 billion rand to recapitalise Abil’s viable assets.

“I see value in Abil’s insurance business,” Cadiz said.

“If there’s more value than the rest of the market sees, then I will benefit. Some may want the liquidity or not to wait the term.”

 

Resolution Plan

 

The Abil administrator is planning an IPO for part of the lender next year, potentially allowing investors to recoup some losses.

Tom Winterboer, appointed to the role by the central bank, didn’t immediately respond to a message left on his mobile phone.

“This offer does not in any way relate to the resolution plan referred to in the press release, related to African Bank Ltd, issued by SARB on August 10,” the Johannesburg-based lender said in a statement today.

“The board of Abil would like to confirm that the entity making the offer is in no way authorised by or instructed to act on behalf of Abil.”

The bank’s statement gave no details on Deep Value Investments.

Cadiz Asset Management, which oversees about 34 billion rand of investments, bought Abil’s bonds before it collapsed and was also listed as a shareholder, according to data compiled by Bloomberg.

“The preference shareholders are both institutions and individuals,” Markus Borner, Abil’s executive responsible for balance-sheet management, said in an e-mailed response to questions today.

 

Not Public

 

“There is no public register and we don’t disclose owners either, as is the case with all banks,” Borner said.

Abil first issued preference shares in 2005 in a private placement aimed at enabling black investors to buy a stake in the bank to make up for economic exclusion during apartheid.

Abil sold more preference shares, which it said offered the highest yield among South African lenders, in 2011 and 2012 to raise capital for the bank.

While preference shares typically don’t carry voting rights, they entitle the holder to a dividend before owners of ordinary shares. Holders of preferred stock also rank higher than ordinary shareholders in receiving proceeds from any liquidation. - Bloomberg News

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