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Matt Dunning

Mercer to buy 34% stake in South Africa-based Alexander Forbes

June 23, 2014 - 3:29pm


Mercer L.L.C., the wholly-owned benefits consulting subsidiary of Marsh & McLennan Cos., announced on Monday that it has agreed to purchase a 34% stake in Alexander Forbes Ltd.

In a statement released on Monday, Mercer said its purchase agreement with the Johannesburg, South Africa-based employee benefits services company is contingent on the approval and successful completion of its upcoming entry onto the Johannesburg Stock Exchange.

Alexander Forbes provides a range of employee benefits and investment services to institutional and retail clients in South Africa and sub-Saharan Africa, including retirement and investment consulting, administrative and actuarial services and health care benefits consulting.

“Alexander Forbes is truly a unique company, in that they have that kind of market dominance in a region that we’re very interested in expanding into,” Julio A. Portalatin, president and chief executive officer of Mercer, said in an interview with Business Insurance. “The strategic value for us is that we have a lot of clients who are thinking of expanding into the African continent, if they haven’t already. Most of them usually start with South Africa and the sub-Sahara region, so this gives us a good foothold in terms of supporting their efforts going forward.”

In a statement separate from Mercer’s, Alexander Forbes Group Chief Executive Officer Edward Kieswetter called Mercer’s investment agreement “a resounding vote of confidence in our country, our region and our world-class economy.”

“Mercer will provide additional benefits for our clients in Africa, while our employees will have access to the latest global skills and trends to help them serve our clients better throughout the world,” Mr. Kieswetter said in the statement. “At the same time, this partnership will provide opportunities for our employees to advance their own talent and potential.”

Alexander Forbes said in its statement that shares of the company would be available through the Johannesburg Stock Exchange to institutional investors only.

The sale price of Mercer’s 34% stake in Alexander Forbes will be set according to the offer price of the company’s share price, which will be disclosed in its pre-listing announcement, according to its statement on Monday.

In 2012, Marsh & McLennan Cos. purchased Alexander Forbes’ commercial insurance brokerage and risk services units in South Africa, Botswana and Namibia, as well as its local operations in Malawi, Mozambique, Nigeria, Uganda and Zambia.

“I think we all see Africa’s potential as a growth market over the next decade as being pretty strong,” Mr. Portalatin said. “We had the decade of Asia, and we’re in the midst currently of the decade of Latin America, and I think it’s probably pretty safe to bet that we’re going to see pretty good growth trajectories in Africa.”

 



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