Wiseman Khuzwayo
FINANCIAL services group MMI Holdings has entered into an agreement with Botswana-listed Imara Holdings Limited (IHL) to acquire 100 percent of stockbroker Imara SP Reid (ISPR).
The acquisition would be for a consideration of R120 million in cash and was subject to regulatory and Imara shareholder approval, MMI announced on Monday.
MMI shares on the JSE fell as low as R29.07 on Monday, the lowest level for the stock since November 11. MMI shares closed 1.68 percent lower at R29.18.
MMI said the rational for the transaction was that ISPR was a well-established medium-sized stockbroker, with over 70 years in the South African stockbroking market.
It provided a full range of broking services from traditional trade execution to full service stockbroking in local equities, derivatives and fixed interest instruments, as well as trading and settlement access to Africa and international markets.
“ISPR’s mainstream brokerage is complemented by portfolio management for individuals and a fully integrated internet service, which includes real-time information, charting and online trading,” MMI said.
The acquisition was aimed at giving MMI increased exposure to more affluent investors and to cut costs incurred by its asset management arm on external brokers.
In addition, the financial services group said the transaction would provide an important building block to develop MMI’s private client wealth management offering and would ensure Momentum Health was able to provide its clients with an attractive private investments value proposition, including stockbroking and share portfolio management. The acquisition would also allow MMI to service the needs of retail and corporate client bases.
Mark Tunmer, IHL chief executive, said the details of the transaction, along with statutory information on IHL and notice of an extraordinary general meeting, would be published in a circular to shareholders in January. He said ISPR had been an important contributor to the Imara group.
However, an increase in online share trading, escalating regulatory and compliance costs and generally changing market dynamics have led to growing pressure and competition, and ultimately to a change in the group’s strategic investment objectives.
Tunmer said ISPR was an attractive investment within the stockbroking industry and the IHL board had considered several proposals from potential buyers. “The purchase consideration to be received from MMI represents a premium to the current net asset value.”