African Harvest approves management buy-out
South African fund manager African Harvest said on Monday it had agreed to sell the firm to a management-led group for around R366-million to help boost its access to money earmarked for black-run companies.
A consortium led by black entrepreneur Mzi Khumalo and members of management would take on the businesses of the loss-making group, most of its assets and certain liabilities, African Harvest said in a statement.
Its shares nipped 1,6% higher to 193 cents against a weak broad market on Monday morning as the market welcomed the deal, which African Harvest said would boost the company’s net asset value per share by 13,5%to 206,65 cents.
Khumalo’s bid was widely expected to succeed after controlling shareholder, finance group Coronation Holdings Limited said it would vote in favour of the offer, and despite talk of another bid from other members of management.
“The Company has been negatively affected in recent months by speculation of uncertainty concerning the commitment of its key shareholders and the stability of its staff,” African Harvest said.
“The Board is of the view that the long-term viability of the company’s businesses requires a clear message to the market and its clients regarding a committed majority empowerment shareholder and a stable staff base,” it added.
South African asset managers have been racing to establish so-called “empowerment” partners and businesses in a bid to access billions of rands worth of government money.
Eight years after the end of apartheid, the former ruling white minority still dominates the economy and the government has put legislation in place to encourage greater access to funds by black-led firms.
African Harvest said has the sale been concluded at June 30, the deal would have been worth R366,1-million and said that despite speculation of another bid it had not yet “received a firm intention to make an offer from a serious source.”
It also said the company’s listing as a financial services company might change as a result of the board’s decision on the strategic direction of the company after the sale.
The deal is subject to regulatory and shareholder approval and final conditions are expected to be met by October 31, 2002. - Reuters.