| Fri 29 Oct 2004, 13:34 | | ABRIDGED PRE-LISTING STATEMENT |
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PSG GROUP / PSG FINANCIAL SERVICES - ABRIDGED PRE-LISTING STATEMENT IN RESPECT
OF PSG FINANCIAL SERVICES
PSG GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1970/008484/06
JSE Share code: PSG ISIN code: ZAE000013017)
(`PSG Group`)
PSG FINANCIAL SERVICES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1919/000478/06
JSE Share Code: PGFP ISIN code: ZAE000060166)
(`PSG Financial Services` or `the company`)
ABRIDGED PRE-LISTING STATEMENT IN RESPECT OF PSG FINANCIAL SERVICES
1. Introduction
Following the reference in the commentary in PSG Group`s interim results
published on Thursday, 12 October 2004 to the possible raising of up to R150
million in preference share capital funding, PSG Group commenced with a private
placement of 190 000 000, and offer for subscription of 10 000 000, cumulative,
non-redeemable, non-participating preference shares with a par-value of R0,01
each (`preference shares`) with selected financial institutions and other
identified potential investors at a subscription price of R1 per preference
share through PSG Financial Services, its wholly owned subsidiary. Both the
private placement and offer for subscription is subject to a minimum
subscription amount of R100 000 per single addressee acting as principal. The
full details thereof appear in 5 below. The directors of the company have
expressly reserved the right to close the offer for subscription at an earlier
date should subscriptions be received whereby the full R200 million is raised by
way of the private placement. The private placement has elicited an extremely
positive response from the selected financial institutions. Prior to the issue
of this Abridged Pre-Listing Statement, expressions of interest had been
received in excess of R200 million in respect of the private placement. The
directors therefore anticipate that they will exercise their aforementioned
right and close the offer early.
The rationale for the issuing and listing the preference shares is that the
company wishes to raise cost effective permanent share capital as part of its
overall capital management programme. This is undertaken in line with the PSG
Group`s `project growth` strategy with a view to providing the Group with
funding for identified future strategic investments within the black economic
empowerment (`BEE`) context. This will aid the company in attaining valuable
direct ownership points in terms of the Financial Services Charter (`the
Charter`) and improve its empowerment credentials. Furthermore, the additional
capital raised will reduce PSG Group`s weighted average cost of capital, and
once listed provide preference shareholders with a liquid tradeable instrument.
Potential investors` attention is drawn to the fact that any information
contained in this Abridged Pre-Listing Statement pertaining to PSG Group,
whether financial or otherwise, may be regarded as being representative of PSG
Financial Services, and vice versa.
2. Information relating to PSG Group and PSG Financial Services
2.1 Incorporation
PSG Group was incorporated in South Africa on 26 June 1970 and is listed on the
JSE in the Financial - `Specialty and Other Finance` sector. PSG Financial
Services is a wholly owned subsidiary of PSG Group and was incorporated in South
Africa on 25 July 1919. PSG Financial Services is the investment holding company
for all of PSG Group`s investments.
2.2 Background
PSG Group was initially incorporated as AWG Properties (Proprietary) Limited.
With effect from 29 September 1987, it was converted to a public company and
changed its name to Mynkar Holdings Limited. This company was listed on the JSE
on 3 November 1987. It subsequently disposed of all of its operating
subsidiaries and became a `cash shell` company on 2 May 1990. With effect from
16 January 1991, PAG Holdings (Proprietary) Limited acquired control of the
company and in so doing the company acquired the management and personnel
consultancy business then carried on by PAG Limited. PAG Holdings (Proprietary)
Limited then changed its name to PAG Limited. The effective date when the change
of control arose was November 1995.
PSG Financial Services was originally incorporated under the name of Champions
Limited in Pretoria. Its name was initially changed to Federale
Dienstekorporasie Beperk on 30 August 1978, then to Fedservices Limited on 19
July 1980, then to Interservices Limited on 6 August 1990, then to Fedservices
Limited on 21 November 1990, then to Servgro Internasionaal Beperk on 16 April
1992, and then to Servgro International Limited on 29 June 1992.
Fedservices was one of South Africa`s largest holding companies and made
investments in various sectors of the services industry during the late 1960`s
and 1970`s. In 1975 these interests were restructured and combined under a
specialist company, namely Servgro International Limited (`Servgro`). Servgro
was listed in 1992 on the JSE in the Industrial - `Beverages, Hotels and
Leisure` sector. During 1997 it was unbundled and subsequent thereto it was
transferred to the Industrial -`Cash Companies` sector of the JSE list. On 6
April 1998 Servgro underwent a change of name to PSG Financial Services Limited
as part of a transaction whereby PSG Group acquired control of Servgro and its
listing was transferred to the Financial - `Banks and Financial Services` sector
of the JSE.
On 26 June 1998, PSG Group procured the listing of PSG Noble Capital Limited
(`PSGN`), an investment trust. During August 1998, PSG Group procured the
obtaining of a banking license for its subsidiary company, PSG Investment Bank
Holdings Limited (`PSGBH`). Simultaneously, it established PSGBH as a wholly-
owned subsidiary of PSGN and commenced with banking activities.
In April 1999, negotiations were concluded whereby PSGN sold 14,3% of its
shareholding in PSGBH to PSG Financial Services, and its net assets to PSGBH. On
implementation of this disposal and listing of PSGBH, the directors of PSG Group
and PSGBH resolved that it would be prudent for PSG Financial Services to be
rendered a wholly-owned subsidiary of PSG Group.
2.3 Group Structure
For a diagrammatic explanation of the structure under which PSG Financial
Services operates, please refer to the full Pre-Listing Statement, copies of
which are available as set out in 7 below.
2.4 Nature of the Business
PSG Group has established itself as a holding company for investments in the
financial services sector. PSG Financial Services is a wholly owned subsidiary
thereof and functions as the investment holding company for all of PSG Group`s
investments.
PSG Group`s main investments comprise of the following:
2.4.1 PSG Capital Limited (`PSG Capital`) (100%)
The business of PSG Capital consists of Treasury Outsourcing, PSG Quantitative,
Corporate Finance, Alternative Investments and Private Equity. Its focus is the
provision of innovative corporate advisory services to mid-capitalisation and
larger companies, together with making opportunistic, direct investments in
connection with the corporate finance transactions in which it has been
involved. In depth market knowledge, local expertise and a network of
influential business partners, allow PSG Capital to identify private equity
opportunities on an ongoing basis and evaluate each opportunity independently
and objectively. Such investments include JSE-listed entities as well as
unlisted South African companies. Ideally, these opportunistic investments are
in high cash positive companies capable of superior returns in the medium to
long term. These investments are made on a passive basis with PSG Capital
generally adhering to a conservative risk profile.
2.4.1.1 PSG Treasury Outsourcing (Proprietary) Limited (`PSG Treasury
Outsourcing`) (51%)
PSG Treasury Outsourcing`s business is that of managing corporates` foreign
exchange risk on a mandate basis through the application of uniquely developed
systems. Its primary focus is that of generating annuity income.
2.4.1.2 PSG Trade Finance (Proprietary) Limited (`PSG Trade Finance`) (66,7%)
PSG Trade Finance acts as an intermediary to large and midsize corporates
requiring trade finance. An exclusive arrangement with China Construction Bank
allows it to place significant amounts of debt facilities with them.
2.4.1.3 Cullinan Industrial Porcelain (Proprietary) Limited (`Cullinan`) (100%)
Cullinan is currently the sole manufacturer of porcelain insulators of its type
in the Southern Hemisphere and supplies both the local and growing export
markets.
2.4.1.4 PSG Capital Quantitative (Proprietary) Limited (`PSG Capital
Quantitative`) (78%)
PSG Capital Quantitative paid its maiden dividend during the course of the
preceding financial year. The afore mentioned fund`s track record of five-year
growth in excess of 16% per annum remains an impressive achievement.
2.4.1.5 PSG Absolute Investments (Proprietary) Limited (`PSG Absolute
Investments`) (51%)
PSG Absolute Investments specialises in the development, packaging and
distribution of absolute return investment products. This includes alternative
investment strategies as well as structured products.
2.4.1.6 Tanzanite Capital Limited (`Tanzanite`)
Tanzanite targets high absolute returns by using value investment, hedging and
trading strategies and has for the eleven months since inception achieved an
effective annualised return of 31,1% (after fees and before tax).
2.4.1.7 Algoa Insurance Company (`Algoa`) (54%)
Algoa is a niche life insurance company specialising in providing absenteeism
management through short-term group disability insurance products. Since its
establishment it has underwritten absenteeism risks and provided short and long
term illness and disability benefits to more than 20 000 employees throughout
the country.
2.4.2 Channel Life Limited (`Channel Life`) (80%)
Channel Life offers clients` business solutions in life insurance, employee
benefits, pension fund administration, health policy monitoring/consulting,
remuneration consulting/surveys and business to business internet based
administration solutions. Channel Life has grown its assets under management to
more than R1 billion in the previous financial year. The recent successful
conclusion of a BEE transaction has resulted in the creation of one of the few
true black-controlled life companies in the country.
2.4.3 PSG Investment Services (Proprietary) Limited (`PSGIS`)
PSGIS is the intermediate investment holding company of PSG Konsult, PSG Online
and PSG Fund Management.
2.4.3.1 PSG Konsult Limited (`PSG Konsult`) (82%)
PSG Konsult provides a wide range of financial products, services and solutions
as one of the largest independent financial planning and advisory businesses in
South Africa. PSG Konsult has approximately 30 000 clients and in excess of R5
billion in funds under management and R10,3 billion of funds under its
administration.
2.4.3.2 PSG Online Holdings Limited (`PSG Online`) (94%)
PSG Online consists of three operating divisions, namely the stockbroking
service provider division, PSG Online (which remains a strong brand in online
stockbroking) and the investor education division.
2.4.3.3 PSG Fund Management (`PSGFM`) (100%)
PSGFM has emerged from its restructuring a leaner asset management business. In
respect of the 2003 calendar year, PSGFM received three Standard & Poor`s
Awards.
2.4.4 MCubed Holdings Limited (`MCubed`) (26%)
MCubed is a premier provider of risk-targeted investment solutions for
institutional and individual investors and is also South Africa`s largest
independent multi-manager. It has in excess of R61 billion in third-party assets
under its management. It provides a range of other services connected its
multi-manager functions, such as third party financial services administration,
individual investments, structured funds and umbrella retirement funds. The
recent announced merger of the domestic multi-management businesses of Momentum
and MCubed will result in over R42 billion worth of funds being placed under the
new entity`s management.
2.4.5 Arch Equity Limited (`Arch Equity`) (16%)
This is a black company as defined in the Charter. It has over the last number
of months acquired 19,7 million PSG Group shares, resulting in it holding 17,1%
of PSG Group`s issued share capital. It is intended that Arch Equity will
continue to subscribe for shares in PSG Group so that it will have a 20% direct
interest in PSG Group. PSG Group intends doing likewise with its shareholding in
Arch Equity, which presently stands at 20%..
2.4.6 BEE and Project Growth
PSG Group, together with all of its subsidiaries, is committed to meaningful and
sustainable BEE initiatives. PSG Group is forging ahead into a new phase of
unparalleled growth, characterised by further acquisitions and a distinct
empowerment angle. `Project growth` inter alia focuses on the Group`s real
growth in earnings and the attainment of a return on equity (`ROE`) target of
20%. PSG Group`s BEE strategy has resulted in it indirectly acquiring a
significant holding in Channel Life. The vehicle facilitating this BEE
transaction is Arch Equity. The intended future listing of Arch Equity on the
JSE in the next few months will also most certainly increase the value of any
investment therein. PSG Group is presently investigating increasing certain of
its shareholdings in other of its investments. It will strive to pursue
meaningful broad-based empowerment opportunities that not only complement its
present investments, but that also deliver tangible growth.
3. Directors
The board of directors of PSG Financial Services and PSG Group is identical. The
full names, ages, nationalities (if not South African), addresses and profiles
of the directors as at the last practicable date are set out below:
Johannes Fredericus Mouton - Executive Director
Appointed: 1995
Age: 58
Business address: 1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch, 7600
Qualifications: BCom (Hons), CA(SA), AEP
Occupation and Experience: Executive chairman of PSG
Group, Chairman of Capitec Bank
Holdings Limited and non-
executive director of various
companies.
Lourentius van Andringa Independent Non-executive
Bellingan - Director
Appointed: 2004
Age 59
Business address: Middebosch 21
Dorp Street, Stellenbosch, 7600
Qualifications: BCom , LLB, CA(SA)
Occupation and Experience: Entrepreneur and director in
various companies.
Patrick Ernest Burton - Independent Non-executive
Director
Appointed: 2004
Age: 51
Business address: Bekker Road, Off Landsdown
Road, Phillipi,7785
Qualifications: BCom (Hons), PG Dip Tax
Occupation and Experience: Financial director of Snoek
Wholesalers (Proprietary)
Limited and director of various
companies.
Jacob de Vos du Toit - Executive Director
Appointed: 2004
Age: 50
Business address: The Terraces Building, 34 Bree
Street, Cape Town, 8001
Qualifications: BAcc, CA(SA), CFA
Occupation and Experience: Executive director of PSG
Group, with portfolio of PSGIS
companies and MCubed and non-
executive director of various
companies.
Markus Johannes Jooste - Independent Non-executive
Director
Appointed: 2004
Age: 43
Business address: 28 6th Street, Wynburg,
Johannesburg, 2018
Qualifications: BAcc, CA(SA)
Occupation and Experience: Managing director of Steinhoff
International and director of
various companies.
Desmond Lockey - Independent Non-executive
Director
Appointed: 2004
Age: 42
Business address: 1st floor, Inanda, 6 Dorp
Street, Stellenbosch, 7600
Qualifications: BA (Law), BA (Hons) Business
Management and Administration
Occupation and Experience: Non- executive director of PSG
Capital Limited and Channel
Life Limited, and a director of
various other companies.
Chris Adriaan Otto - Executive Director
Appointed: 1995
Age: 54
Business address: 1st Floor, OU Kollege, 35 Kerk
Street, Stellenbosch, 7600
Qualifications: BCom, LLB
Occupation and Experience: Executive director of PSG
Group, non-executive director
of Capitec Bank Holdings
Limited, chief executive
officer of PSG Capital and non-
executive director of various
companies.
Jacobus van Zyl Smit - Independent Non-executive
Director
Appointed: 2004
Age: 63
Business address: 1st Floor, Ou Kollege, 35 Kerk
Street, Stellenbosch, 7600
Qualifications: BCom, LLB, CA(SA), DCom
Occupation and Experience: Non-executive director of
Capitec Bank Holdings Limited
and director of various
companies.
4. Share Capital of PSG Financial Services
The authorised and issued share capital of PSG Financial Services, before and
after the private placement and the offer for subscription, assuming that all
the preference shares up to an aggregate value of R200 000 000 are allotted and
issued, is set out below.
Before the private placement and the offer for subscription
R million
Authorised share capital
1 000 000 000 ordinary shares of R0,08 each R80 000 000
200 000 000 cumulative, non-redeemable, non- R2 000 000
participating preference shares of R0,01 each
Total authorised share capital R82 000 000
Issued share capital
573 401 094 ordinary shares of R0,08 each R45 872 087,52
Total issued share capital R45 872 087,52
Share premium
On 573 401 094 ordinary shares of R0,08 each R92 174 894,86
After the private placement and the offer for R million
subscription
Authorised share capital
1 000 000 000 ordinary shares of R0,08 each R80 000 000
200 000 000 cumulative, non-redeemable, non- R2 000 000
participating preference shares of R0,01 each
Total authorised share capital R82 000 000
Issued share capital
573 401 094 ordinary shares of R0,08 each R45 872 087,52
200 000 000 cumulative, non-redeemable, non- R2 000 000
participating preference shares of R0,01 each
Total issued share capital R48 372 087,52
Share premium
On 573 401 094 ordinary shares of R0,08 each R92 174 894,86
On 200 000 000 cumulative, non-redeemable, non- R198 000 000
participating preference shares of R0,01 each
Total share premium R290 174 894,86
At a general meeting of PSG Financial Services held on 8 September 2004 the
requisite number of the company`s shareholders approved the special resolution
whereby, inter alia, the terms and conditions attaching to the authorised
preference shares were amended such that they became cumulative, non-redeemable
and non-participating with a par value of R0,01. Notwithstanding the amended
terms and conditions, the company`s authorised preference share capital remained
R2 000 000 (two million Rand).
At the same general meeting, shareholders also approved the ordinary resolution
placing the preference shares under the control of the directors of the company
who are authorised to allot and issue the preference shares at their discretion,
subject to the provisions of section 221 and 222 of the Act and the Listing
Requirements of the JSE.
The authorised but unissued preference shares after the listing will be under
the control of the directors until PSG Financial Service`s next Annual General
Meeting, subject to the provisions of the Act and the JSE Listings Requirements.
PSG Financial Services will from time to time seek to raise additional capital
by issuing further preference shares, which will rank par passu with existing
preference shares. Such preference shares will be listed on the JSE.
5. Details of the Offer for Subscription, Private Placement and the Listing
5.1 Particulars of the offer for subscription
Subscription price per preference share with a par R1,00
value of R0,01 each
Minimum Rand value of subscription per applicant R100 000
acting as principal
Number of preference shares offered 10 000 000
Amount to be raised in terms of the offer for R10 000 000
subscription
The preference shares rank in priority to any payment of dividends to the
holders of any other class of shares in the capital of the company not ranking
prior to or pari passu with the preference shares. All preference shares rank in
pari passu with each other.
5.2 Important dates for the offer for subscription
Opening date of the offer for Thursday, 28 October 2004
subscription (09:00)
Closing date of the offer for Monday, 15 November 2004
subscription (12:00)
Listing date (09:00) Friday, 19 November 2004
5.3 Private placement
Prior to the issue of this Pre-Listing Statement, 190 000 000 preference shares
with a par value of R0,01 were placed with selected institutional investors at a
subscription price of R1,00 per preference share. Expressions of interest have
been received from these institutions to subscribe for all 190 000 000
preference shares, thereby raising R190 000 000. These preference shares are
identical in all respects to those forming the subject of the offer for
subscription.
5.4 Condition to the listing
The JSE has granted PSG Financial Services a listing of a maximum of 200 000 000
preference shares in the Specialist Securities - `Preference Shares` sector
under the abbreviated name PSGFIN PREF and the above named share code and ISIN
number. The listing is subject to the condition that PSG Financial Services
meets the requirements of the JSE in respect of the requisite spread of
preference shareholders, being a minimum of 50 (fifty) public preference
shareholders, excluding employees and their associates.
5.5 Over-subscriptions
If the offer for subscription is oversubscribed, all applications will be
reduced pro rata on an equitable basis, as determined by the directors in their
sole discretion, subject to the minimum subscription amount of R100 000 for a
single addressee.
6. Salient features of the preference shares
The preference shares are cumulative, non-redeemable and non-participating.
Preference dividends are payable semi-annually at least 7 (seven) business days
prior to the date on which PSG Financial Services pays its ordinary dividend, if
any, but in any event the preference dividend, if declared, shall be payable not
later than 120 (one hundred and twenty) business days after 28 February and 31
August, respectively.
6.1 Voting rights
The preference shares are non-voting, save for those circumstances prescribed
under Section 194 of the Act. Preference shareholders will only be entitled to
vote during those periods when the preference dividend, or any part thereof,
remains in arrears and unpaid after six months from the relevant preference
share dividend payment date or when a resolution of PSG Financial Services is
proposed which resolution directly affects the rights attached to the preference
shares or the interests of the preference shareholders, including a resolution
for the winding-up of PSG Financial Services or for the reduction of its
capital.
6.2 Entitlements to dividends
Preference shareholders will be entitled to receive dividends out of profits of
PSG Financial Services, that it determines to distribute, in priority to any
payment of dividends to the holders of any other class of shares in the capital
of the company not ranking prior to or pari passu with the preference shares. An
ordinary dividend will therefore not be declared unless a preference dividend
has been declared. The preference dividend shall be calculated by multiplying
the subscription price of the preference share by not less than 75% of the prime
rate, being the prime overdraft lending rate of ABSA Bank Limited from time to
time, on the preference dividend accrual date, on a daily basis, in arrears. The
preference dividend rate shall be advised by no later than ten business days
before the allotment and issue of the preference shares. Any preference dividend
that remains in arrears or unpaid shall accumulate such that any outstanding
dividend will attract interest at the relevant prime rate compounded monthly
from the relevant dividend accrual date until payment thereof by the company,
which shall be in preference to any payments to any other class of shareholder
in the company.
7. Copies of the Pre-Listing Statement
Copies of the Pre-Listing Statement can be obtained during normal business hours
prior to 12:00 on Monday, 15 November 2004 from PSG Capital Limited, 1st Floor,
Ou Kollege, 35 Kerk Street, Stellenbosch, 76000. Any prospective investor with
any questions relating to the preference share offer is invited to contact PSG
Capital Limited at (021) 8879602.
Stellenbosch
29 October 2004
Corporate Adviser and joint sponsor
PSG Capital Limited
(Registration number 2002/017362/06)
Lead sponsor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
(Registration number 1970/003711/07)
Date: 29/10/2004 12:03:34 PM
Produced by the JSE SENS Department
