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Abridged Prospectus relating to the Listing of NVest Financial Holdings Limited
NVEST FINANCIAL HOLDINGS LIMITED
(formerly NVest Financial Holdings (RF) Proprietary Limited and in the process of being changed from
NVest Financial Holdings (RF) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2008/015990/06)
(“NVest” or “the Company”)
ISIN Code: ZAE000199865 JSE Code: NVE
ABRIDGED PROSPECTUS RELATING TO THE LISTING OF NVEST FINANCIAL HOLDINGS (RF) LIMITED
1. BACKGROUND ON THE PROSPECTUS
The board of directors of NVest (“Directors”) are pleased to announce the issue of a prospectus
prepared and issued in terms of the JSE Limited (“JSE”) Listings Requirements and the Companies
Act, 2008 (No. 71 of 2008), as amended (“the Act”), relating to a Private Placing and Preferential
Offer for subscription of NVest ordinary Shares by way of:
- an offer by the Company by way of a Private Placing of 4 000 000 shares at 100 cents each
and a Preferential Offer for subscription of 22 250 000 shares of 100 cents each, totalling
26 250 000 ordinary no par value Shares in the issued share capital of the Company at an
issue price of 100 cents per ordinary Share; and
- the subsequent listing of up to 205 129 362 ordinary Shares of 100 cents each in NVest on the
Alternative Exchange (“AltX”) of the JSE, Collectively, the (“Private Placement”)
Opening date of the Private Placement (comprising the Private
Placing and Preferential Offer) at 09h00 on Monday, 25 May 2015
Closing date of the Private Placement (comprising the Private
Placing and Preferential Offer) at 12h00 on Tuesday, 26 May 2015
Anticipated listing date on AltX at commencement of trade on Friday, 29 May 2015
NVest advises that the Private Placement is already fully allocated.
The Shares placed in terms of this Prospectus will rank pari passu with the existing ordinary Shares in
NVest and rank equally as to voting, share in profits, dividends and distributions.
At the date of closing of the Private Placement and assuming that the Private Placement is fully
subscribed, NVest share capital will comprise 1 000 000 000 authorised ordinary Shares of no par
value and 205 129 362 issued ordinary Shares of no par value with stated capital of approximately
R68 765 694 (before write off of share issue expenses). There will be no convertible or redeemable
Shares issued.
There is no minimum subscription in terms of the Private Placement. The listing will only be subject to
meeting the minimum spread requirements for companies listing on the AltX as detailed below.
The Company is required to meet the minimum spread requirement of at least 10% to be held by the
general public as defined in the JSE Listings Requirements, which will amount to approximately
R10 250 000 or 10 250 000 shares at 100 cents per share. This will be achieved based on the
allocations made. The Company already has public shareholders holding more than 5% before the
Private Placement.
The JSE has granted NVest a listing in respect of up to 205 129 362 ordinary Shares on the AltX under
the abbreviated name “NVest”, share code “NVE” and ISIN ZAE000199865. It is anticipated that the
listing of the Shares on AltX will become effective from the commencement of business on or about
Friday, 29 May 2015 or such later date as granted by the JSE.
The Private Placement has not been underwritten.
The Company does not have any Treasury Shares or debentures in issue.
Applications for ordinary Shares in NVest must be for a minimum of 10 000 ordinary Shares at 100
cents per share, amounting to R10 000, and in multiples of 100 ordinary Shares thereafter. Fractions
of Shares in NVest will not be issued.
The Shares in NVest will be tradable on the JSE in dematerialised form only and, as such, all investors
who elect to receive their ordinary Shares in NVest in certificated form, will have to dematerialise
their certificated Shares should they wish to trade therein.
The Directors, whose names are given in paragraph 1.2 of the Prospectus issued by the Company,
collectively and individually accept full responsibility for the accuracy of the information given and
certify that to the best of their knowledge and belief there are no facts that have been omitted
which would make any statement false or misleading, that all reasonable enquiries to ascertain such
facts have been made and that the Prospectus contains all information required by law and the JSE
Listings Requirements.
An English copy of this Prospectus, accompanied by the documents referred to under “Registration
of Prospectus” in paragraph 4.2 of this Prospectus, was registered by the Commissioner on 22 May
2015 in terms of Regulation 52(5) of the Act.
2. Incorporation and nature of business
NVest, a formally private, but now public company, is duly incorporated in accordance with the
laws of South Africa. The Company started off (in its original form) as the East London office of NFB
Financial Services Group (“NFB”) with NFB as a company being founded in April 1985 in Port
Elizabeth, fundamentally as money market and gilt brokers.
In July 2008, various of the associated, separately owned companies (owned by the individuals or
Trusts of individuals who had built up the companies) that were in operation at that time, namely NFB
Finance Brokers Eastern Cape (Pty) Ltd (“NFB Finance Brokers Eastern Cape”), NFB Insurance Brokers
(Pty) Ltd (“NFB Insurance Brokers “) and NFB Finance Brokers Port Elizabeth (Pty) Ltd (“NFB Finance
Brokers Port Elizabeth”), restructured to become a subsidiary of the NVest Group of companies and
NVest was born. NVest then entered into an agreement with Sasfin Securities Proprietary Limited
(“Sasfin”) in terms of which NVest took over Sasfin’s East London branch and formed a new
company, NVest Securities (that housed all of the clients and accounts of the former East London
branch of Sasfin), in exchange for a 20% shareholding in the new Group holding company, NVest.
Various shareholders of the previously independent companies (NFB Finance Brokers Eastern Cape,
NFB Insurance Brokers and NFB Finance Brokers Port Elizabeth, then did share swaps to become
shareholders of NVest, which in turn became a shareholder of those said companies. As with most
private companies, the Shareholders’ Agreement at that time made provision for the shareholders to
have director representation on the Board of the Companies and thus the Directors of the Company
came to be the shareholders (or Trust appointed Directors who were the individuals that helped build
the companies) at that time. Such directors, as well as later appointed directors being individuals
who were identified as being key to the overall management and succession planning of the
business and who were offered small stakes in the business, have run the business since that time.
NVest is a Financial Services Group although the core subsidiary companies, NFB Private Wealth
Management and NVest Securities are asset management / private wealth type of businesses, with
approximately R13.4 billion assets under administration and management as at 31 December 2014.
3. Purpose of the offer
The rationale for the listing is to provide NVest with a platform to grow beyond the Eastern Cape. It is
our belief that being listed on the Alt-X will further raise the profile and visibility of the organization
which in turn will lead to increased opportunities presenting themselves. A listing will also help
increase the liquidity of the shares of the Company and a staff incentive scheme will enable the
Company to attract and retain key individuals.
NVest has a large established client base who we are confident will want to subscribe for any shares
made available to the public; which we believe will result in an over-subscription. NVest also has a
strong relationship with Sasfin which may be able to offer a portion of the Company’s shares to its
clients should they be available. Thus it is expected that the capital raising exercise ahead of the
Listing should prove successful.
Ahead of the listing, the shareholding previously held by Sasfin was repurchased by the Company as
a means of effecting a management buy-back of the Company’s equity that originated when the
Company acquired the East London branch of Sasfin Securities in 2008 as well as to enable Sasfin to
exit its private equity investment in the Company.
As the Company intends to raise R26 250 000 from the listing, the proceeds from the offer will be used
to settle any remaining obligation to Sasfin in relation to the Repurchase and any excess funds
retained in the business thereafter be used to contribute towards future acquisitions and growth
strategies as is deemed appropriate at the relevant time. Overall, the business, by its nature, is highly
cash generative and the group does not need to raise capital for its current and near future funding
requirements. As stated above, the capital raised will be used to fund the settlement of the
Repurchase Consideration as well as to position the Group for future acquisitions and growth
strategies.
In addition, the purpose of the Private Placing is to expand the capital base and shareholder spread
of the Company in order to achieve a minimum spread of shareholders in terms of the JSE Listings
Requirements.
4. Financial Information
An extract of the historical financial information for the three years ended 28 February 2014 is set out
below. The company expects to publish its results for the year ended 28 February 2015 on or about
29 May 2015.
Statement of financial position
Group
Figures in Rand 2014 2013 2012
ASSETS
Non-Current Assets
Property, plant and equipment 1 230 169 1 312 316 1 452 784
Goodwill 25 841 279 26 204 485 26 567 717
Investment in joint ventures 60 60 60
Investments in associates 14 812 666 5 562 079 107 311
Loans to group companies 431 953 496 832 1 072 853
Loans to shareholders - - 1 026 336
Other financial assets 200 000 200 000 200 000
Deferred tax 425 034 279 846 255 535
42 941 161 34 055 618 30 682 596
Current Assets
Loan to group companies - - 467 484
Loans to shareholders 1 843 032 1 759 874 -
Current tax receivable - - 99 900
Trade and other receivables 7 073 502 6 073 535 6 616 108
Cash and cash equivalents 49 734 504 38 115 772 30 247 701
58 651 038 45 949 181 37 431 193
Total Assets 101 592 199 80 004 799 68 113 789
EQUITY AND LIABILITIES
Equity
Share capital 18 120 538 18 120 538 18 120 538
Retained income 57 307 016 48 579 345 36 699 967
Equity Attributable to Equity Holders of Parent 75 427 554 66 699 883 54 820 505
Non-controlling interest 3 633 741 1 767 120 1 287 174
79 061 295 68 467 003 56 107 679
Liabilities
Non-Current Liabilities
Operating lease liability 93 851 13 817 207 290
Loans from shareholders - - 601 588
93 851 13 817 808 878
Current Liabilities
Loans from shareholders 486 200 972 401 530 813
Current tax payable 850 347 939 475 195 741
Operating lease liability - 218 308 229 936
Trade and other payables 21 100 506 9 393 795 10 240 742
22 437 053 11 523 979 11 197 232
Total Liabilities 22 530 904 11 537 796 12 006 110
Total Equity and Liabilities 101 592 199 80 004 799 68 113 789
Number of shares in issue (Post sub-division) 177 500 000 177 500 000 177 500 000
Net asset value per share (cents) 42.5 37.6 30.9
Net tangible asset value per share (cents) 27.9 22.8 15.9
Statement of Comprehensive Income
Group
Figures in Rand 2014 2013 2012
Revenue 97 211 558 78 578 886 70 057 090
Cost of sales (22 361 491) (17 319 327) (12 487 135)
Gross profit 74 850 067 61 259 559 57 569 955
Other income 2 492 180 2 180 072 2 031 828
Operating expenses (45 841 922) (40 580 240) (38 687 022)
Operating profit (loss) 31 500 325 22 859 391 20 914 761
Investment revenue 1 653 807 1 206 481 965 080
Income from equity accounted investments 9 250 588 5 430 578 65 748
Finance costs (163) (2 195) (2 987)
Profit before taxation 42 404 557 29 494 255 21 942 602
Taxation (9 735 870) (7 805 416) (6 983 265)
Profit for the year 32 668 687 21 688 839 15 004 337
Other comprehensive income - - -
Total comprehensive income 32 668 687 21 688 839 15 004 337
Total comprehensive income attributable to:
Owners of the parent 30 926 530 20 985 876 14 586 108
Non-controlling interest 1 742 157 702 963 418 229
32 668 687 21 688 839 15 004 337
Profit attributable to :
Owners of the parent 30 926 530 20 985 876 14 586 108
Non-controlling interest 1 742 157 702 963 418 229
32 668 687 21 688 839 15 004 337
Headline earnings reconciliation:
Profit attributable to equity owners of the 30 926 530 20 985 876 14 586 108
parent
Adjustments (9 706 504) (4 314 324) (260 300)
Headline earnings 21 220 026 16 671 552 14 325 808
Weighted average shares in issue (post 177 500 000 177 500 000 177 500 000
subdivision)
Earnings per share (cents) 17.4 11.8 8.2
Headline earnings per share (cents) 12.0 9.4 8.1
5. Prospects
The Directors of the Company believe that the Group has excellent prospects based on the
following:
- NVest has an experienced, well-balanced, innovative and motivated management team;
- The management team own the majority of the equity in the Group and are therefore well
incentivised to ensure that the Group continues to grow assets under management and
Group earnings and none of the management are disposing of their equity in the Group on
listing;
- NVest (in the form of the original company, NFB, with other subsidiaries being added over the
years) has been in business for 30 years in 2015 is very well established in East London, where
the bulk of the business operates from and earns its income;
- The Group has an experienced and sizeable investment process team as well as a formidable
distribution network in its current markets;
- The Group has an excellent investment track record across asset classes in respect of aspects
of the Group offering investment management services and the Group’s investment process
and team, positions it well to sustain performance levels for our clients, thereby increasing our
ongoing management income streams, retaining existing clients and attracting new clients;
- NVest has evidenced an ability to grow assets under management to over R14bn by
attracting new investors;
- NVest is a full service financial services Group that is able to offer solutions for the majority of
the financial needs of its clients;
- The Group is fairly unique in South Africa as it is a full service, independent financial services
Group that has its own stock broking company which is an equities member of the JSE and is
able to leverage off this inherent strength in its product offering both within that stock broking
company and the financial advisory businesses;
- Besides demonstrating an excellent track record in managing client monies, the Group also
offers risk advisory services and fiduciary services such as estate planning, drafting of Wills and
administration of deceased estates – thereby ensuring that we have professionals to guide
and assist our clients throughout their financial lives as well as to protect their legacies;
- NVest intends expanding its existing operations in the coastal areas of South Africa
(specifically Port Elizabeth, Cape Town and Durban) by leveraging off its successful Eastern
Cape base;
- Management has identified a number of strategic bolt-on acquisitions that should enhance
the Group’s wealth management and distribution network;
- In 2014, NVest Securities had successfully brought to market a direct equities offshore solution
that management expects will grow substantial assets under management over the coming
years; and
- In April 2015 the Group launched its commercial property services company under the NVest
Property Services brand and together with looking at consolidating its joint venture position in
NVest Properties, management believes that the Group will continue to grow its earnings from
NVest Properties.
6. Authorised and issued share capital
The authorised and issued share capital of the Company as at the last practicable date is as follows:
Authorised share capital
1 000 000 000 ordinary Shares of no par value
1 000 000 000 unclassified preference shares (1)
Issued stated share capital
178 879 362 ordinary Shares of no par value
Notes:
1. The unclassified preference shares are subject to classification by the Board in accordance with
the JSE Listings Requirements.
The authorised and issued share capital of the Company on the date of listing, assuming that the
Private Placement of 26 250 000 new Shares is fully subscribed (but before listing costs), will be as
follows:
Authorised share capital
1 000 000 000 ordinary Shares of no par value
1 000 000 000 unclassified preference shares
Issued stated share capital
205 129 362 ordinary Shares of no par value (before write off of share issue expenses)
The remaining authorised and unissued Shares, after the Private Placing, will be under the control of
the Directors of the Company, subject to the provisions of the MOI, the Act and the JSE Listings
Requirements.
There are no treasury Shares held as at the last practicable date.
7. Directors
Jonathan Goldberg (53)
Nationality South African
Identity Number 6205275126083
Business address 3 Pearce Street, Berea, 5214, East London
Appointment date 1 April 2015
Qualifications - B.Comm (University of Port Elizabeth), 1983
- LL.B (University of Port Elizabeth), 1986
- Honours in Business Administration (University of Stellenbosch),
1988
- MBA (University of Stellenbosch), 1988 – 1989
- Numerous managerial and self-study courses - 1989 – 2014
Occupation Chief Executive Officer - Global Business Solutions
Position in Company Independent non-executive chairperson
Term of office No fixed term but subject to the provisions of the MOI in terms of
rotation of Directors
Anthony Denis Godwin (55)
Nationality South African
Identity Number 5910275002082
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 3 July 2008
Qualifications - International Capital Markets Qualification (Registered
Persons Examination), 2001
- National Certificate in Wealth Management, 2005
Occupation Group CEO/ Senior Financial Advisor
Position in Company Chief Executive Officer
Term of office No fixed term, but subject to the provisions of the MOI
Frank Terence Knox (59)
Nationality South African
Identity Number 5605195017083
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 14 May 2015
Qualifications - Bachelor of Commerce (University of the Transkei), 1985
- Bachelor of Accounting Science (Honours) (University Of
South Africa), 1995
- Advanced Certificate in Industrial Relations and Human
Resources (Rhodes), 1997
Occupation Financial Director
Position in Company Group Financial Director
Term of office No fixed term but subject to the provisions of the MOI
Robert More McIntyre (40)
Nationality South African
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Identity Number 7406155061080
Appointment date 1 April 2015
Qualifications - Bachelor of Commerce (Accountancy) (Rhodes), 1996
- Postgraduate Diploma in Accountancy (Rhodes), 1997
- Advanced Diploma in International Taxation (RAU), 1999
- CA(SA), 1999
- JSE Traders Exam, 2011
- South African Institute of Stockbrokers Board Exams (SAIS),
2012
- CPA, Canada, 2014
Occupation Managing Director of NVest Securities and Stockbroker
Position in Company Corporate Finance Director
Term of office No fixed term but subject to the provisions of the MOI
Gavin Robin Ramsay (42)
Nationality South African
Identity Number 7206205028083
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 3 July 2008
Qualifications - Bachelor of Commerce, 1994 – Economics, Management,
Accounting (Rhodes)
- International Capital Markets Qualification (Registered
Persons Examination), 2001
Occupation Senior Financial Advisor / Asset Manager
Position in Company Executive Director
Term of office No fixed term but subject to the provisions of the MOI
Andrew Vincent Kent (54)
Nationality South African
Identity Number 6102165006089
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 3 July 2008
Qualifications - International Capital Markets Qualification (Registered
Persons Examination)
- JSE Traders Exam
- UNISA Programme in Investment Analysis and Portfolio
Management modules – Investment Background, Investment
Analysis, Ethics and Tax Planning for Investments
Occupation Portfolio Manager / Equity Trader
Position in Company Executive Director
Term of office No fixed term but subject to the provisions of the MOI
Brendan Joseph Connellan (40)
Nationality South African
Identity Number 7411205086087
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 6 April 2009
Qualifications - Bachelor of Commerce (Rhodes), 1997
- Postgraduate Diploma in Financial Planning (UFS), 2000
- Advanced Postgraduate Diploma in Financial Planning (UFS),
2002
- International Capital Markets Qualification (SAIFM -
Registered Persons Examination), 2001
- Certificate in Compliance Management (UCT), 2006
- JSE Compliance Officers Exam (SAIFM), 2008
Occupation Group Operations and Compliance Director and Company
Secretary
Position in Company Executive Director
Term of office No fixed term but subject to the provisions of the MOI
Travis Henry McClure (40)
Nationality South African
Identity Number 7408285085088
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 1 April 2015
Qualifications - Bachelor of Commerce Degree, Economics and
Management (Rhodes University), 1997
- International Capital Markets Qualification (SAIFM
Registered Persons Examination), 2001
- Postgraduate Diploma in Financial Planning (UFS), 2007
Occupation Senior Financial Advisor of NFB and director of a subsidiary
company
Position in Company Executive Director
Term of office No fixed term but subject to the provisions of the MOI
Philip Barry Bartlett (40)
Nationality South African
Identity Number 7409145137085
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 1 April 2015
Qualifications - Postgraduate Diploma in Financial Planning (UFS), 2009
- Attorney's Admission Exam, 2000
- LLB Degree (University of Stellenbosch), 1998
- BA (Law) Degree (University of Stellenbosch), 1996
Occupation Senior Financial Advisor of NFB and director of subsidiary
company
Position in Company Executive Director
Term of office No fixed term but subject to the provisions of the MOI
Siviwe Relebohile Kwatsha (36)
Nationality South African
Identity Number 7810105328087
Business address 11 William Avenue, Vincent, East London
Appointment date 1 April 2015
Qualifications - Bachelor of Science (Computer Science) cum laude
(Rhodes), 1998
- Bachelor of Science with Honours (Computer Science) cum
laude (Rhodes), 1999
- Certificate in Corporate Governance (UJ), 2014
Note: Currently reading towards an MCom in Information
Systems
Occupation Managing Member – Little Pig
Position in Company Independent non-executive director
Term of office No fixed term but subject to the provisions of the MOI in terms of
rotation of Directors
John Philip Ross-Smith (69)
Nationality South African
Identity Number 4512035043181
Business address NFB House, 42 Beach Road, Nahoon, East London, 5241
Appointment date 1 April 2015
Qualifications - Bachelor of Economics (University of Kwa-Zulu Natal), 1977
- Diploma in Marketing Management (Damelin College), 1981
Occupation Independent Consultant
Position in Company Independent non-executive director
Term of office No fixed term but subject to the provisions of the MOI in terms of
rotation of Directors
8. Time and date of the opening and closing of the Private Placing
2015
Date on which the Private Placement (comprising the Private Placing and Monday, 25 May
Preferential Offer) contemplated in this Prospectus will be open at 09h00 on
Date on which the Private Placement (comprising the Private Placing and Tuesday, 26 May
Preferential Offer) contemplated in this Prospectus will close at 12h00 on
Date on which shareholders will be advised of their allocations Thursday, 28 May
Date on which funds will be debited from shareholders’ accounts Thursday, 28 May
Date on which shares will be allocated to shareholders’ accounts Friday, 29 May
Listing of securities on the JSE at the commencement of business on Friday, 29 May
A copy of the prospectus can be obtained from the head office of the company in East London or the
Designated Advisor in Johannesburg or on the company’s website at www.nvestholdings.co.za
25 May 2015
Designated Advisor Attorney
Arbor Capital Sponsors Cooper Conroy Bell and Richards Inc.
Stockbroker Auditor, Reporting Accountants
NVest Securities Proprietary Limited Grant Thornton Cape Incorporated
Date: 25/05/2015 08:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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