Since 2016, Prudential Financial and LeapFrog Investments have invested in high-quality financial services companies across the African continent, including the Enterprise Group in Ghana and Icea Lion in Kenya. 

“We are excited to broaden our presence in Africa and enter South Africa with this investment,” says Pavan Dhamija, Prudential Financial’s regional president. Prudential Financial intends to further increase its strategic minority ownership interest in Alexander Forbes through a partial offer to all shareholders such that its resulting shareholding will increase to 33%. The transaction is subject to regulatory approvals and other customary closing conditions. 

The deal will be structured such that Prudential Financial will acquire the strategic minority interest in Alexander Forbes from Mercer through its subsidiary New Veld, LLC. Prudential will own 99% of New Veld, LLC and LeapFrog the remaining 1%. LeapFrog Investments is acting as the investment manager to Prudential Financial, subject to approval by the Mauritius Financial Services Commission. 

Dhamija told Business Maverick that he is not able to comment on the cost or funding structure related to the acquisition of shares, save to say that there will be no impact on Alexander Forbes’ cash or net debt position. 

The deal is not expected to have any impact on the company’s BEE credentials. In terms of board changes, Simon O’Regan who currently represents Mercer on the board, will resign as a director with effect from the day following the completion of the transaction. Prudential Financial is entitled to nominate one non-executive director for as long as it holds at least 10% but less than 25% of the issued shares, or two non-executive directors for as long it holds 25% or more of the issued shares.

African Rainbow Capital (ARC), which has a 39.9% shareholding in Alexander Forbes, has the right to nominate one non-executive director to the board for so long as it owns at least 7% of Alexander Forbes. To better align the relationship agreements between the company’s two strategic shareholders, Alexander Forbes will also grant ARC the right to nominate one additional non-executive director for so long as it holds 25% or more of the issued shares. 

Gary Herbert, chief operating officer and partner at LeapFrog Investments, says the investment reinforces LeapFrog’s commitment to deepening access to financial tools to generate prosperity for consumers in emerging markets. 

Finally, Dawie de Villiers, chief executive of Alexander Forbes, says the transaction is an exciting development that will enable the company to leverage the global insights available through Prudential Financial to enhance its value proposition. BM/DM