Stellar Capital Partners, the investment company which acquired troubled South African financial services group Cadiz Management in 2015, is looking to make a strategic equity investment in Prescient Holdings, the company that houses Prescient’s financial services interests. The deal strengthens Stellar’s ability to build a significant asset management and broader financial services platform company.
The transaction, which is worth R1.43 billion (approximately $100 million) would reportedly give Stellar a 40% to 49% stake in Prescient Holdings, the newly formed private venture holding the financial services assets, depending on the uptake by other Prescient shareholders and a pending empowerment deal. Prescient shareholders will be offered a cash dividend of 85 cents per share which can either be reinvested or cashed out. Prescient Holdings management shareholders will reinvest in the new venture, holding a 40% stake.
The price of the stake is based on a valuation for an effective 100% of Prescient Holdings, which has been calculated as the sum of 11x the annualized budgeted net profit after tax for the financial services business for the year to 31 March 2017, plus an agreed level of excess capital held by Prescient Holdings and its subsidiaries.
The transaction is conditional upon certain standard regulatory and other requirements being met.