Shares in African Equity Empowerment Investments (AEEI), the diversified majority black-owned investment group, surged 21 % after it said it would be making a proposal to shareholders to repurchase their shares for an agreed consideration, followed by a proposed delisting from the JSE.
The shares closed 21.11% higher at R1.08 on the JSE yesterday.
AEEI said in a statement yesterday its decision followed the recent unbundling of the Group’s investment in Ayo Technology Solutions Limited (AYO) and the proposed disposal by Kilomix, a wholly owned subsidiary of AEEI, of its 30% shareholding in British Telecom South Africa (BTSA) for R290 million.
“AEEI’s Net Asset Value (NAV) will be significantly reduced because of these proposed transactions. Further, with the current operating environment and illiquidity of the shares, along with the strained relationship between the JSE and Sekunjalo companies listed on the JSE, the board has determined that the remaining portfolio no longer warrants the costs and administrative burden associated with a listing relative to any benefits a publicly traded entity on the JSE, can bring,” it said.
AEEI will make an offer to all “Eligible Shareholders”, to purchase their shares for a total maximum Offer Consideration of R165 987 333.80. As Sekunjalo Investment Holdings (SIH) is a concert party, this intention offer will exclude SIH who hold 346 685 622 shares and will thus abstain from voting.
The proposed buy-back and delisting are subject to the requisite Listing Requirements set by the JSE, and to shareholder approval. Further, as this is an affected party transaction, it is also subject to the Companies Act.
In accordance with the Takeover Regulations, AEEI said it had constituted an independent board, which in turn has appointed an independent expert to evaluate the firm intention offer. Exchange Sponsors Projects Proprietary Limited would provide a full opinion to the board, and the full report would be issued by means of a circular when complete.
AEEI is the latest company to announce it is delisting as other companies grapple with their listed shares seeing a sizeable discount to net asset value
AmaranthCX, a business consultancy, said in August that by June 30, 2023 South Africa had already had 14 companies delist their ordinary shares. Local markets are well on track to match or exceed 2022's 27 delisting, it said.
This month Business Report reported African Rainbow Capital Investments (ARC), majority owned by Ubuntu-Botho Investments (UBI) with investments such as TymeBank and Rain in its portfolio, flagged in its 2023 annual report that it was not sure that remaining listed on the JSE remains in its best interests, despite it being on a robust growth trajectory.
ARC chairperson Mark Olivier said: “The sizeable discount to net asset value and the low free float will receive more focus in 2024. These structural issues need resolving as they affect the fund’s ability to raise capital.
Sasfin on Friday as it announced a R3.2 billion sale of its Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses to African Bank said it was done also to strengthen its core business.
The board of directors was of the view that the company traded at a significant discount to the sum of its parts valuation due to the high costs of being a tier-two bank and a number of sub-scale business units.
As a result, Sasfin aims to become a more focused and streamlined business. This has resulted in the disposal of and entering into agreements to dispose of certain non-core assets, it said.