Actis Would Favor Strategic Sale of Alexander Forbes Over IPO

Actis LLP, a private equity firm, said it would prefer to sell its stake in South African pension fund manager Alexander Forbes Ltd. (AFP) to another company rather than list the shares on a stock market.

“Our preference in most instances is a strategic sale,” Actis’ Head of Africa John van Wyk, 49, said in an interview on Sept. 27 in Johannesburg. “This usually translates into a better understanding of value and better pricing on a sale.”

Actis led an 8.2 billion rand ($811 million) buy-out of Johannesburg-based Alexander Forbes in 2007 as part of a group that included Ethos Private Equity Ltd., Canadian fund managers Caisse de Depot et Placement du Quebec and the Ontario Teachers Pension Plan. There is a “process under way” that could lead to Actis’ exit 12 months from now, according to Van Wyk, with both a sale and an initial public offering being considered.

Alexander Forbes Chief Executive Officer Edward Kieswetter said on Sept. 2 the company is planning an IPO after June next year as the private equity shareholders seek to exit.

“I am following a board mandate to prepare for an IPO which has the backing of the whole board including Actis and Ethos,” Kieswetter said by phone yesterday. “Each shareholder in considering their own position will look at the pros and cons. A trade sale is a clean exit while a listing may have a lock up period. The board will choose the option that unlocks the most value.”

‘Significantly Larger’

Alexander Forbes has had “all kinds of interest” from potential buyers over the past four years, according to Kieswetter. “We are getting a sense of interest in the market and strategic buyers,” he said.

Actis has three Africa-focused private equity funds and is in the process of raising cash for a fourth, Van Wyk said. The company has raised more than $2 billion across Africa funds since 2003, including real estate and agribusiness-focused ventures, according to Van Wyk. The company prefers to keep investments for three to seven years, he said.

The most recent private equity fund makes investments in African companies of an average of $100 million, according to Van Wyk, with the target ranging from $50 million to $250 million. “Over the years, deal size has become significantly larger,” he said.

Actis, which also invests in Asia and Latin America, is interested in companies able to tap into increased urbanization in Africa as well as rising consumer spending, with a particular focus on financial services. It agreed to buy South African automated telling machine operator Paycorp Holdings Pty Ltd. for 937 million rand in August and invested $244 million in Egypt’s Commercial International Bank in 2009.

The company proposed an offer for Johannesburg-based drugmaker Adcock Ingram Holdings Ltd. (AIP) earlier this year, two people familiar with the matter said in August. Adcock has since agreed to be bought by Chilean drugmaker CFR Pharmaceuticals SA (CFR) in a 12.6 billion rand deal.

To contact the reporters on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net; Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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