17 August 2016
1. Are there concerns about the Hudaco claim against Bravura?
ARC: We have performed our due diligence investigation and are comfortable to let that matter run its course.
CMB International: We performed satisfactory due diligence. Bravura’s network and the opportunity to acquire additional strong financial services has been a strong consideration and benefit.
Bravura: Bravura disputes the validity of the claims against it by Hudaco and is defending them. The matter remains ongoing and Bravura is not in a position to comment further on the merits of the matter until such time as the issues have been ventilated in court and judgement has been delivered.
2. The Hudaco allegations must have had a massive impact on Bravura’s reputation, and yet ARC has invested. What are your comments on this?
We have had immense support from our clients since the Hudaco matter. This investment from ARC clearly recognises Bravura’s potential as a growing business with a reputation for excellence, immense intellectual capital and the delivery of bespoke solutions for clients. We are about to celebrate 17 successful years in the business and we have enormous potential for further growth. We are proud that ARC has recognised this and we look forward to further success.
3. What are the other businesses that were bought by CMB International?
Aren’t these all Bravura businesses?
No, there are various shareholders.
4. What will ARC’s total investment be?
The value is R120 million (R60million of equity and R60million preference share facility)
5.What is the current value of CMB International?
It is approximately R400 million.
6. Discounted rate / valuation / how was the investment value calculated?
The business was valued using a discounted cash flow methodology as well as a reasonability price earnings multiple check. A healthy discount was then awarded to ARC due to their BEE credentials and significant networks.
7. Has this deal been planned for some time?
8. What was the reasoning behind Bravura’s sale to CMB International - an entity listed on the Stock Exchange of Mauritius and then listed on the Namibian Stock Exchange last year? What does the inward listing facilitate?
9. Why the NSX and not the JSE?
10. Is Bravura owned 100% by CMB International?
11. What was Bravura valued at? / What did CMB International pay for Bravura?
Bravura was sold for a total consideration of R116 million. It was an acquisition for shares – the shareholders of Bravura received shares in CMB International. The resulting shareholding of the Bravura shareholders after the ARC transaction is 25% of CMB International.
12. Why did CMB International acquire Bravura?
CMB International intends to grow its portfolio of assets, mainly through strategic investments into high quality financial services businesses such as Bravura.
The acquisition of Bravura further provides an opportunity to capitalise on the know-how and network of the Bravura group, thereby enabling CMB to identify further investment opportunities and to facilitate the capital raising to finance its investments.
13. Who are the shareholders of CMB International?
Titan Group continues to hold 14%. Capital Markets Brokers owns 44%. ARC will own just under 30%. The shareholding of Bravura’s other original shareholders (excluding Titan Group) will be 11% after the ARC transaction. There are some other smaller shareholders.
14. Who were the shareholders of Bravura at the time of the Hudaco transaction?
Titan Group, management and staff.
15. How are they now involved in the business?
All of them are now shareholders of the listed group.
16. How was the Hudaco case addressed when Bravura was sold to CMB International?
CMB was satisfied with its exposure post the completion of an extensive due diligence.
17. So the investment is effectively flowing offshore and being held offshore? Is ARC not focused on South African businesses?
ARC is investing in financial services in South Africa and Africa. The ARC investment will be used to acquire businesses in Southern Africa.
18. Are shares in CMB International available to the public?
Yes, although there is currently limited liquidity, we believe that with the growth of the combined group there will be increased liquidity into the future.
19. What is the way forward?
The platform for CMB International’s continued growth with ARC as a shareholder of reference and the access to capital for the planned acquisitions and diversification is significant.
CMB International, the listed holding company of Bravura, intends to grow its portfolio of assets, mainly through strategic investments into high quality financial services businesses.
The ARC investment provides a strong transaction pipeline and access to capital to grow the business through acquisitions as we further diversify into non-bank financial services, for example alternative investment management, and trading and brokerage services. This growth will be complementary to our core corporate finance, structured solutions and property investment and advisory services.