Anchor Group plans to delist from the JSE

The investment firm is the latest to want to exit the exchange.
CEO Peter Armitage believes Anchor will better service its clients in the long term as an unlisted entity.

JSE-listed Anchor Group is the latest company to announce plans to delist from the exchange.

The investment firm, which was founded in 2012, and listed in September 2014, and now has R64.9 billion in assets under management, is making a R4.25 per share offer to shareholders. If accepted, it will amount to a R900 million offer and see it delist in 2021.

Read Anchor’s full Sens statement

Anchor Group says this offer represents an 11% premium to the 30-day volume weighted average price over the 30 business days preceding the announcement.

“This is an exciting next step in the evolution of our group. We have built critical mass, with over 15 000 clients and over R65 billion of assets under management and administration, and we believe we will better service our clients in the long term as an unlisted entity,” says Anchor Group CEO and founder Peter Armitage.

Anchor share price since listing

This move by Anchor Group comes weeks after industrial group Afrox said it also planned to leave the JSE.

Read the Afrox Sens announcement

The number of companies leaving the exchange has driven concerns that the JSE is losing its stature as a preferred place for companies to source capital.

Armitage echos this view.

He says the SA-listed equity market has been very difficult for the last few years. Since the cost of funding is now the cheapest in decades, it made sense for the company to propose buying out shareholders – who wish to sell – at a premium to the listed price.

“We believe the SA market, particularly in the smaller company space, is not likely to attribute high earnings multiples to companies for some time to come. This has led to a number of delistings in SA, including the asset management space.”

Given this outlook, it wants to put in place a different corporate structure, which will be more appropriate, “enabling management to focus on achieving its clients’ investment objectives.”

The proposed new structure will see the company having three core shareholder groupings – Management, Masimong and Capricorn Capital Partners. None of these parties will control Anchor Group.

It says this new structure along with the proposed delisting will help achieve its objectives of facilitating it becoming 51%-black-owned and increasing management’s stake.

It has access to R450 million to facilitate the delisting. The group will be funding this, along with support from lender RMB, up to a maximum of R250 million.

Its management, Masimong and Capricorn have provided an undertaking to take up any further equity required to buy out additional existing shareholders who elect to sell.

Listen: Sasfin’s David Shapiro looks at what’s behind a company’s choice to delist, with Nompu Siziba

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This is highway robbery. Barely a 7.5% premium to the market price. Shareholders have watched the share price decline dramatically over many years and now management attempts to force through a transaction. No doubt shareholders will get as much as they received when Armitage lost most of their money when he ran that Investec Hedge Fund a decade ago. Shareholders should reject this with the scorn it deserves.

Clearly Anchor was overvalued at R16. Is it undervalued at R4? Who knows, but Armitage does not determine the share price (at least not directly), and usually the market gets it right.

It is safe to say that the economy is heading for the rocks, it is dragging Anchor in this gale-force economic storm that is battering the country.

We have got too many fund managers with too little funds to manage. Decades of disastrous ANC policies reflect in the health of the financial industry. When you keep on redistruting wealth, at some stage that wealth will disappear from pension funds and end up as leaking sewers in the squattor camps, or in the pockets of connected cadres in Dubai.

Not always is it the ANC, think it is a cultural thing in SA whereby those in charge are just expletives & seem to get away with it.
Anchor should not have listed in the first place, the Management have benefitted nicely, just like them Cadres, so it is across the SA landscape of them who are in charge

This is what Wiese did with Pepkor long ago – delist at a low to relist at a market high. No respect for long term shareholders.

You acquired numerous advisory practices in the market (aka bought assets) and paid in shares. You then forced all those assets into your solutions, and the sellers are now stuck with a share trading well below the value they sold out at…. YAY CAPITALISM.

More Pain for Shareholders

This is shameless. Having lost their shareholders 75% of their investment over the last 5 years, they are taking the “exciting next step” without them. I think that the words “better serving our clients”, should be replaced by “better serving ourselves”

Investors do you still remember the incentive scheme that benefited Anchor exec directors greatly? And the Astoria nightmare run by Anchor? Check their share track record. Be aware – stay away!

AUM growing strongly, great strategic shareholders in Hollard and new BEE shareholder being Mike Teke, will continue to attract growing AUM.
The foundation of any asset management business is growing AUM.
This is what they are doing??
They have over R70 million in cash on hand.
I suggest to all shareholders decline this very cheap offer.

Wow – since 3/12/2016 the share price has plummeted from R 18.15 to a pay out of R 4.25 – sad how some companies can mislead shareholders. Et Tu Peter

I agree with the watchdog 100%.
Peter lost a load of money when he ran a few hedge funds for Investec private clients.
I expect Investec kept this quit for reputational purpose, thus allowing Peter to start Anchor years later.
It will be interesting to see who the scheme partners will be??

When i started trading shares with Investec Armitage was thought by junior brokers to walk on air i soon found out Armitage was looking after himself and Investec especially with their exorbitant brokerage fees
My opinion was cemented when soon after founding Anchorage he and fellow directors wanted to pay themselves huge bonuses.
His co peaked at R18 plus and now he wants out at R4 , these people are the pits . I would not touch them

If nav = R4.50, why R4.25?

Plus for long term investors, the share was trading at about R16 five years ago.

Does not seem like a good offer at all.

Usually investors get a lot more when companies are bought out or delist.

The shareholders can vote yes or no?

Theoretically, but there will be so many associated conflicted parties voting yes, that the vote will carry, irrespective. Once again, the truly independent minority shareholders will get screwed.

If the share holders do not sell their shares does the deal stall?

I would not sell my Anchor shares if I had any out of principle.

I will by some Anchor shares on Monday.

Imagine if the Banks did the same now?

Shareholdwes would lose on average more than 30% of their investments in Bank shares.

This smells seriously rotten. I think the FSCA should investigate the personal share transactions of Anchor execs. Check if they have ever sold their (illiquid) personal staff shareholdings into client portfolios. This delisting is likely going to be some scheme to ultimately sell the entire group (to the PIC for example). Execs will then walk away with a few hundred million each and will go and retire somewhere safe.

Very cheeky offer – even a simple valuation shows this.
R117m in cash means cash alone is 54c per share.
At 425c this means they are paying R371c for the business which is R807m or 1.23% of assets.
Way way too cheap.
This is easily worth 600c a share or 2% of assets.(1.75% of assets plus cash)

End of comments.

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