Investec gobbles Fedsure in R5,75bn deal

OWN CORRESPONDENT, Johannesburg | Thursday

INVESTEC, South Africa’s sixth-largest banking and financial services group, is to take over the insurance and financial service businesses of Fedsure Holdings in a deal valued at around R5,75bn.

Investec, which already holds 14.5% of Fedsure, said it would pay 13.2 of its own shares for each 100 of the smaller company’s, along with R250m in cash.

The widely anticipated deal would exclude Fedsure’s troubled health business and create a company with R19bn worth of funds under administration.

The transaction received a lukewarm response on the markets, with Investec’s share price closing 460c, or 1,9% lighter at R235, having gone as low as R229,40.

Fedsure’s share price gained 30c, or 1,02%, to R29,80.

Analysts said the share movement might reflect concerns that Investec was paying too much.

Arnold Basserabie, Fedsure’s chief executive, said the R250m would be used to recapitalise Fedsure Health, which would operate as a stand-alone business.

Business Report quoted an analyst as saying the transaction was “definitely not a bargain.”

Another one said: “I’m not saying it is too much, but they are definitely paying the full price. The (market) response might be reflection of concerns about how (Investec) will realise value out of this deal.”

Steven Koseff, Investec’s chief executive, said the merged entity would become South Africa’s largest fund manager with third party institutional, private and retail funds under management exceeding R337bn. The linked product businesses would have more than R19bn in funds under management.

Koseff said the deal would also enable the groups to restructure their cross holding and move forward as a combined group, Business Report said.

Analysts have identified the cross holding as something Investec needed to deal with before moving to the London Stock Exchange.
- Reuters

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