Banele Ginindza

Employee benefits administrator, Alexander Forbes Group, relisted on the JSE to much fanfare yesterday morning, with the share price gaining more than 12 percent from a R7.50 opening price at 8.10am to close at R8.41.

The company also announced that Mercer, a subsidiary of Marsh & McLennan, had agreed to acquire 34 percent of the group, an investment that would give Mercer an opportunity to broaden its exposure in sub-Saharan African markets.

The shares first traded at R8.10, compared with the initial public offer (IPO) price of R7.50. By 1pm, the shares were trading at R8.40, valuing the company at almost R11 billion.

The company, which was taken private by a group of investors led by buyout firm Actis in 2007, returned to the bourse after a R3.7bn public offering last week, the country’s largest flotation in four years.

Alexander Forbes’ delisting in 2006 came after the company was involved in a massive secret profits scandal arising mainly from bulking the bank accounts of the many funds it administered. It then kept most of the additional interest earned.

The company, which agreed to repay R368 million to pension funds under its administration, also paid a fine of R12m to the Financial Services Board.

“The listing is a great outcome because it gives the opportunity for continuity of the work done,” chief executive Edward Kieswetter said.

Alexander Forbes has said that it may pay out as much as 67 percent of its earnings as dividends.

Kieswetter announced that the company’s permanent employees across the board had been awarded 1 000 shares each as a token of appreciation for their commitment.

The shares will vest in three years and are conditional on the employees continued presence in the company.

Alexander Forbes said this month that it was looking to expand its presence in sub-Saharan Africa, and that it was already providing retirement planning and insurance services in several African countries such as Namibia, Botswana, Kenya and Nigeria.

“Our return to the JSE is an exciting and momentous occasion. It is also a historic moment for our permanent employees, who each have been given shares which will vest after three years as our recognition of their continued contribution to our success,” Kieswetter said.

He added that the synergies with Mercer would allow for the retention of client opportunities in the drive for the continental market, while also enabling Alexander Forbes to acquire clients for its business from Mercer.

Mercer initially acquired a 14.9 percent stake with the listing of Alexander Forbes with an option to acquire a further 19.1 percent at a price linked to the offer price, subject to regulatory approvals.

The agreement with Mercer and the listing mean all existing shareholders – including private equity players Actis, Ethos, the Shanduka black economic empowerment vehicle, management and staff trusts – must exit their investments and consider fresh investments if they are interested in the listed entity.