Delistings from the JSE are hardly cause for celebration. But at least when a delisting is done in a dignified manner, investors might toast a small victory.
Last week life assurer Clientèle, associated with the Hollard financial services empire, indicated its intention to wend its way off the JSE.
While Clientèle is a thinly traded share, with more than 90% of the issued shares controlled by a handful of entities, there might have been hopes of a longer tenure on the JSE. The company had in recent years clinched two sizeable acquisitions where scrip was used in settlement.
But the persistent discount the share price offered to Clientèle’s embedded value (EV), the lack of institutional investor interest and the inability to issue new shares to raise fresh capital eventually weighed on the listing.
Still, there is no doubt that Clientèle — with two promising acquisitions that extend market share in the bag — is at an interesting juncture. And there’s the attractive dividend yield of over 7%.
It’s encouraging, then, that Clientèle offers both a chance for shareholders to exit at a decent enough buyout premium as well as an opportunity to remain on board the enlarged unlisted group. The buyout price of R19.90 a share gives a 25% premium on the average share price 30 days prior to the delisting announcement. The price also represents 85% of Clientèle’s last stated EV of R22.64 a share.
Unlisted shares have drawbacks, most notably a distinct lack of liquidity. Clientèle, though, will ensure that those shareholders remaining on board can exit annually through a put option. Over the next decade or so shareholders will be able to sell shares at 85% of the latest EV number to an annual limit of R50m. A most palatable pitch.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.