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Acquistion of an Interest in Futuregrowth
WOMEN'S INVESTMENT PORTFOLIO HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/001291/06)
("Wiphold")
PROPOSED ACQUISITION OF AN INTEREST IN FUTUREGROWTH ASSET MANAGEMENT
(PROPRIETARY) LIMITED ("FUTUREGROWTH") BY WIPCAPITAL (PROPRIETARY) LIMITED
("WIPCAPITAL")
1. Introduction
Shareholders are advised that Wipcapital, a wholly owned subsidiary of
Wiphold, has reached an agreement to acquire a shareholding in Futuregrowth
from FirstRand Asset Management (Pty) Ltd ("FRAM"), subject to the
conditions precedent in 5 below ("the transaction"). The transaction has
been structured such that Wipcapital will acquire an initial 40%
shareholding, with the option to move to a control shareholding in two
years. An initial 20% shareholding in Futuregrowth has been set aside for
an Employee Empowerment Share Ownership Plan ("ESOP") established for the
benefit of management and employees of Futuregrowth. FRAM will remain with
an effective 40% shareholding and will jointly control the company until
such time as Wipcapital exercises its option.
2. Nature of business
Futuregrowth is a specialist asset management company based in Cape Town.
Established in January 2000 as an empowerment venture in the FirstRand
Group, Futuregrowth has experienced a rapid inflow of funds and currently
has R25 billion of assets under management. The company is an acknowledged
market leader in specialist quantitative equity investments, fixed interest
fund management, new alternative investments and development funds.
Futuregrowth targets large institutional investors and also markets a suite
of retail investment products through Futuregrowth Unit Trusts.
Rationale
Futuregrowth's business philosophy and empowerment vision is aligned with
that of Wipcapital. Its already attractive growth prospects will be
enhanced by Wipcapital's penetration into Futuregrowth's target market and
Wipcapital's empowerment credentials as well as through interaction with
Wipcapital's advisory and funds business. Futuregrowth's activities are
complementary to Wipcapital's existing businesses and will accelerate
Wipcapital's specialised funds management initiatives. The acquisition is
expected to enhance Wipcapital's predominantly advisory income generating
businesses with annuity income.
Certain divisions of Wipcapital and the FirstRand Limited group
("FirstRand") have already established good working relationships. Given
this background and the value that FirstRand will continue to add to
Futuregrowth's business, the acquisition of control in phases by Wipcapital
should maximise Futuregrowth's ability to benefit from having two strategic
shareholders.
4. Salient terms of the transaction
Further salient terms of the transaction include, inter alia, the following:
Wipcapital will acquire a 40% shareholding in Futuregrowth for a cash
consideration of R20 million with effect from 1 January 2002;
Wipcapital has an option to increase its shareholding to 56,5% after 1
January 2004 (10% at a fixed price of R5 million plus carrying cost and 6.5%
at an independently determined market value ("market")) ("the option");
if Wipcapital exercises the option FRAM will have a put option against
Wipcapital in respect of its remaining shareholding at market less 10%; and
Wipcapital has the ability to own 100% of the shares in Futuregrowth after 1
January 2007 under certain conditions including FRAM being a willing seller
of its then remaining shareholding.
Conditions precedent
The transaction is subject to, inter alia, the following:
finalisation of acceptable sale of shares and shareholders agreements;
implementation of the ESOP; and
any regulatory approvals as may be required.
Johannesburg
6 December 2001
Sponsor and corporate adviser
Wipcapital (Proprietary) Limited
(Registration number
1997/021195/07)
Legal adviser
Tabacks (Proprietary) Limited
(Registration number
2000/010434/07)
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