INVESTMENT company Stellar Capital Partners, which has retail tycoon Christo Wiese as an anchor investor, has bolstered its position in the asset-management sector with a proposed R1.43bn acquisition of the financial services businesses operated by Prescient.
In 2015, Stellar, which owns interests in industrial services group Torre and unlisted electronics manufacturer Tellumat, took control of struggling Cadiz Asset Management.
The Prescient deal is more substantial than the Cadiz one, and offers Stellar a platform on which to build a significant asset management and related financial services offering.
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Stellar CEO Charles Pettit confirmed on Wednesday that Stellar was eyeing other opportunities that could combine with Prescient.
Immediate speculation in the market was that Prescient could be looking at offshore opportunities on the administration side of the asset management business, where the company has built a viable niche, as investment regulations have become more onerous.
The terms of the proposed deal involve several options for Prescient shareholders that are premised on the financial services assets being sold to Stellar but the technology business, PBT, remaining behind as a standalone listed vehicle.
If the deal is approved, Prescient shareholders will be offered a cash dividend of 85c a share that can be cashed out or reinvested.
The reinvestment option involves either taking shares in newly created Prescient Holdings (PFH) — an unlisted vehicle that will house the financial services assets — or in Stellar (at an effective 171c a share).
Prescient shareholders can also opt for a combination of a cash payout and shares in PFH and Stellar.
The senior Prescient management team, including founder Herman Steyn and CEO Mike Buckham, will reinvest in PFH, securing a stake of 40% in the business.
Pettit said that, depending on the uptake by other Prescient shareholders, and a pending empowerment deal, Stellar hoped to hold a stake of 40%-49%.
The value of Prescient’s financial service assets — which include fund management, administration services, and stockbroking — was based on applying an 11-times earnings multiple on forecast profits for the year to end-March 2017. But the collective value of the deal is worth more than the 85c a share cash offer, with the remaining PBT assets arguably worth about R400m (based on recent earnings), and two investment properties (Johannesburg and Dublin) that are worth about R60m.
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