* Listing values pension manager at nearly $1 billion
* Investors drawn by steady earnings, Africa prospects
* Listing follows S.Africa's largest IPO in four years
(Adds trader comments)
By Tiisetso Motsoeneng and David Dolan
JOHANNESBURG, July 24 Shares in Alexander Forbes
surged 12 percent on their return to the Johannesburg bourse on
Thursday, valuing the retirement fund manager at almost $1
billion as it dazzled investors with the prospect of steady
earnings and growth across Africa.
The company, which was taken private by a group of investors
led by buyout firm Actis in 2007, returned to the bourse after a
3.7 billion rand ($353 million) public offering last week, South
Africa's largest flotation in four years.
Investors were drawn by the regular income from its pension
management and insurance businesses, and the potential for
growth in sub-Saharan Africa where financial services are still
"It's a solid company that's making decent profit on a
regular basis and it has sizeable assets under its management,"
said Petri Redelinghys, a trader at Inkunzi Investments in
"I'm actually a buyer of the stock, but it's run so hard so
quickly that I think a little bit of patience might be the way
Alexander Forbes has said it may pay out as much as
67 percent of its earnings as dividends.
The shares first traded at 8.10 rand, compared with the
initial public offer (IPO) price of 7.50 rand. By 1100 GMT the
shares were trading at 8.40 rand, valuing the firm at nearly 11
billion rand ($1 billion).
The price is around 11 times the firm's trading profit per
share for the 2014 financial year, according to Reuters
Alexander Forbes said this month it was looking to expand
its presence in sub-Saharan Africa. It already provides
retirement planning and insurance services in several African
countries such as Namibia, Botswana, Kenya and Nigeria.
Following the listing, Marsh & McLennan, the world's
top insurance broker, is due to become Alexander Forbes' biggest
shareholder with a 34 percent stake.
Marsh is due to buy the stake in two tranches starting with
14.9 percent at the listing and the rest shortly after.
The listing follows the biggest Johannesburg flotation since
Royal Bafokeng Platinum's 2010 IPO, according to
Thomson Reuters data.
In dollar terms, Alexander Forbes' public offering is South
Africa's seventh-largest IPO on record. It also allowed a group
of investors led by London-based private equity firm Actis to
exit the company in a buoyant market.
The Actis-led group took the company private in an 8.2
billion rand deal seven years ago, just before the global
financial crisis. Since then the South African equity market has
recovered to post a chain record highs this year.
($1 = 10.5423 South African Rand)
(Editing by Ed Cropley and Mark Potter)