African Phoenix and Zarclear consider a merger

African Phoenix would acquire the entire share capital of Zarclear.

South Africa-based African Phoenix Investments, which rose out of the ashes of African Bank Investments Limited, 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 (assets minus liabilities) of 536 cents as of the end of September, trading at a discount of 20 percent on Tuesday, giving it a market value of R970 million. African Phoenix had a net asset value of 94 cents as of the end of June, trading at 23.4 percent discount on Tuesday, when its market capitalisation stood at R1.02 billion.

“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 R245 million to take a 22 percent stake in African Phoenix.