JCI price is `inflated'

Max Gebhardt

ANALYSTS believe Mzi Khumalo’s Capital Alliance-led African Mining Group has paid a premium for Anglo American’s mining house, JCI.

The deal, announced this week with Anglo’s interim results, saw the consortium purchase a 34,9% stake in the mining house for R2,8- billion at R54,50 per share.

One analyst said the fundamentals showed that JCI was substantially inflated at R50 per share.

The consortium, which includes Co-ordinated Network Investments, African Renaissance and the Women’s Development Bank, managed to clinch the deal from under the nose of Cyril Ramaphosa’s New African Investments Limited.

As in the Johnnic deal, Anglo will continue to retain an interest, holding some 12% of JCI. The African Mining Group consortium has, according to Anglo, the right of first refusal on its remaining stake if it decides to sell.

South Africa’s premier mining house has a market capitalisation of R7,5-billion and a controlling interest in South Africa’s top gold mine Western Areas.

Capital Alliance is a relative newcomer to the financial market, but since Khumalo assumed the mantle as executive chairman he has managed to pull off several coups for the group.

Many analysts first started to sit up and take notice when it secured the services of former deputy managing director of Standard Corporate Merchant Bank, Mark Barns, last month as group chief executive.

He also managed to pull on board Arnold Shapiro, formerly senior portfolio manager at Old Mutual. His ability to bring these two heavyweights from the financial sector into the company’s fold is viewed as an endorsement of the respect with which Capital Alliance is now held in the industry.

Capital Alliance Holdings has in the last six months been on a major acquisition drive, which saw the group acquire the entire issued share capital of Capital Alliance Bank (formerly NDH Bank), Capital Alliance Securities (formerly Ryan Anderson) and Capital Alliance Limited.

Khumalo, a former Umkhonto weSizwe cadre, who spent 12 years on Robben Island, formed his own management consulting company, MK & Associates in Durban in 1990.

In 1994, in conjunction with McCarthy Retail and Rand Merchant Bank, Khumalo formed Capital Alliance. Latest results for the six months to September showed taxable income attributable to ordinary shareholders reached R25-million, with earnings per share rising to 35,2 cents from 26 cents.

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