| Wed 9 Apr 2003, 9:39 | | Brait exits ipac SA to focus on its core business |
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Financial Services Correspondent
AS PART of its strategy to scale back on investments made during its incarnation as an aspiring investment bank, Brait announced yesterday that it had sold its 50% stake in ipac SA to a consortium made up of that company's management.
Amid the meltdown in the second-tier banking sector last year, JSE Securities Exchange SAlisted Brait opted to hand back its banking licence. This decision has since led to the bank selling off a number of its non-core investments.
Yesterday's announcement is in line with that strategy and sees an ipac SA management consortium buy Brait's 50% stake in the financial planning specialist for an unnamed sum.
Ipac SA was started in July 1999 and Brait stepped in at the inception, shepherding ipac SA to its current position, where it advises on more than R3bn worth of assets. The remaining 50% of ipac SA will continue to be held by its Australian parent company, ipac Securities, which manages R70bn.
Andrew Bradley, ipac SA CEO and head of the consortium, said the deal had been on the burner for about a year, before being signed in September last year.
"We approached Brait in March last year as our business didn't really fit into their business model. This deal was in both our best interests," he said.
Bradley said, however, that the management buyout would have no effect on the business of the company. "Our people and our values will stay the same, and there will be no change to our business approach."
Bradley said Brait's input had largely been at a strategic level in any event.
Brait chief operating officer Georgina Mariouklas said the decision to exit ipac was in line with its decision to focus on its core business units.
Since handing in its banking licence, Brait has largely focused on private equity, investment and advisory services.
"Ipac is very retail-oriented and once we handed back the banking licence, it no longer fitted in with our key focus."
The decision to hand in the banking licence was estimated to cost Brait about R65m. However, given the crisis in small banks last year, the costs outweighed the benefits of maintaining a banking operation.
Brait still remains listed on the JSE, as well as the London and Luxembourg bourses.
Despite questions asked by analysts over whether Brait would not be better served by delisting from the JSE, the company has not yet indicated whether it will follow this route.
Mettle, another small financial services company, recently announced that it would be delisting from the JSE.
This is the second Brait divestment announced in the past week after the company revealed that it would also be selling its 17% stake in Kagiso Media.
Brait's results for the year to end-March are expected to be released towards the end of next month. For ipac, it will continue to be business as usual, although, in Bradley's words, it will now be "controlling its own destiny".
Apr 09 2003 07:03:31:000AM Rob Rose Business Day 1st Edition
