Discovery bookbuild to raise R1.8 billion

To fund its separation from banking group FirstRand. 

Discovery plans to issue new shares in the market through an accelerated bookbuild to raise R1.85 billion to fund several acquisitions from banking group FirstRand, including the latter’s stake in its credit-card venture. 

In September, Discovery said it would acquire full control of the Discovery Card by buying out FirstRand’s 25 percent stake. Under the agreement, Discovery would also buy FirstRand’s interest in Discovery Bank, the remaining 25 percent stake that FirstRand has in the card joint venture, and all rights to the Discovery book. 

Discovery is separating its business from FirstRand because it’s in the process of launching a banking operation. 

Discovery said the total acquisition price payable by Discovery to FirstRand will be R1.85 billion. The company’s board has decided that the acquisition should be funded through an accelerated bookbuild, as the deal “presents an important opportunity for Discovery.”

Discovery said it has received all regulatory approvals for the deal with FirstRand. 

Rand Merchant Insurance, which currently holds 25 percent of Discovery’s ordinary shares, has indicated that it intends to apply for up to R464 million worth shares through the bookbuild. 

Certain directors of Discovery including, Adrian Gore (Group CEO), Barry Swartzberg and Herschel Mayers, who collectively hold 13 percent of Discovery’s ordinary shares, have irrevocably committed to subscribe for in aggregate R240 million worth of shares through the bookbuild. 

The participation of directors in the bookbuild is subject to shareholder approval at Discovery’s annual general meeting later in November.