African Phoenix goes to court over pref share scheme


African Phoenix goes to court over pref share scheme


Published Date: 2019-06-05 | Source: Stephen Gunnion | Author: Stephen Gunnion

African Phoenix goes to court over pref share scheme

The investment group wants to buy back its preference shares as it shifts strategy.

African Phoenix Investments goes to court today to seek approval for a scheme to buy back its preference shares as it positions itself as an investor in high-growth unlisted companies.

While its proposal to buy back the preference shares received the approval of the majority of its shareholders at a meeting in March, one shareholder voted against the resolution and asked African Phoenix to seek court approval. The investment holding company was formed out of the so-called "bad bank" assets of African Bank Investments (ABIL) following its collapse in 2014. However, now that it was no longer involved in any banking-related activities, it said preference share capital was not appropriate. It wants to simplify its capital structure and support its investment initiatives primarily into medium-sized private SA companies with strong cash flows and high growth potential.

If it doesn't get court approval for the scheme, it plans to go ahead with a voluntary repurchase of the preference shares, which has the support of 93% of shareholders.

Meanwhile, it's pushing ahead with its investment strategy and has set up API Capital Fund, a private equity investor which is managed by a black-owned fund manager, tasked with identifying suitable investments. These will include black empowerment shareholdings that are not typically available to public-market investors. Currently, its sole investment is Stangen, the insurance company that previously sold credit life and funeral policies to ABIL's customers. However, it said API Capital had reviewed a number of investment opportunities with a view to investing capital within the next 12 months and was currently conducting due diligence processes on two opportunities. A further three possible investments were at non-binding offer stage after securing approval from the investment committee.

African Phoenix reported a 5.6% rise in its net asset value per share to 53c for the six months to end-March. Cash and financial assets available for investment declined by 32% to R1.3 billion, excluding the R507.1 million set aside to buy back its preference shares and R655 million held by subsidiaries Stangen and Gilt Edged Management Services, a dormant company. Earnings and headline earnings per share for the period declined by 29% to 1c.

It said there had been no change in the status of its investment in Residual Debt Services, the old ABIL, which remains under curatorship.

Its shares closed unchanged at 59c yesterday.


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