African Phoenix Investments (API), which rose out of the ashes of African Bank, is considering a merger with new shareholder, financial services group Zarclear.
African Phoenix would acquire the entire share capital of Zarclear, in an exchange determined by the ratio between the net asset values of the two companies, the parties said on Tuesday.
Zarclear had a net asset value of 536c as of the end of September, trading at a discount of 20% on Tuesday, when it had market capitalisation of about R970m.
African Phoenix had a net asset value of 94c as of the end of June, trading at 23.4% discount on Tuesday, when its market capitalisation stood at R1.02bn.
“The respective boards of directors of Zarclear and African Phoenix have considered the capital base and structure, the cost base, the empowerment credentials and the strategic options of both companies and are of the view that there are a strong operational and capital markets rationale for the proposed merger,” the parties said in a joint statement after markets closed on Tuesday.
“A proposed merger will position the merged entity as an investment holding company that is able to execute on its strategies of private equity and market infrastructure investments where management and shareholders are closely aligned,” the statement read.
In August Zarclear had paid R245m to take a 22% stake in African Phoenix.