Wrap Text
Abridged Pre-listing Statement
M FITEC INTERNATIONAL LIMITED
Incorporated in the Republic of South Africa
(Registration number 2015/294800/06)
Share code: MFI ISIN: ZAE000209607
(“M-FiTEC” or “the Company”)
ABRIDGED PRE-LISTING STATEMENT
This abridged Pre-listing Statement is prepared and issued in terms of the Listings Requirements. This
abridged Pre-listing Statement is not an invitation to the public to subscribe for or to purchase Shares in M-
FiTEC in any jurisdiction, but is issued in compliance with the Listings Requirements for the purpose of
providing information with regard to the Company.
This abridged Pre-listing Statement relates to the listing of M-FiTEC as a SPAC on AltX with effect from the
commencement of trade on Tuesday, 17 November 2015. This abridged Pre-listing Statement contains the
salient features of the Company and the Listing and as such is not intended to be comprehensive. For a full
appreciation of, inter alia, the Company and its business strategy, the Pre-listing Statement issued by M-
FiTEC on Tuesday, 10 November 2015 (which is available as set out in paragraph 7 below) should be read
in its entirety. Capitalised terms used in this abridged Pre-listing Statement have the meaning ascribed to
them in the full Pre-listing Statement.
In anticipation of the Listing of M-FiTEC as a SPAC by way of Introduction, the Company raised R76 187 740
by way of a Private Placement which comprised (i) an offer to institutional Selected Investors;
and (ii) an offer to Selected Investors acting as principals, in terms of which 7 618 594 Shares were
subscribed for at a price of R10.00 per Share.
As at the Listing Date:
- the total authorised share capital of M-FiTEC shall comprise 400 000 000 Shares and 2 000 000
Deferred Ordinary Shares;
- the issued share capital of M-FiTEC shall comprise 7 618 594 Shares and 1 800 000 Deferred Ordinary
Shares;
- the stated capital of M-FiTEC shall be R76 187 740; and
- the Directors shall hold, in aggregate, 1 800 000 Shares and 1 800 000 Deferred Ordinary Shares
representing an interest of approximately 23.63% of the issued share capital of M-FiTEC.
1. BACKGROUND AND INTRODUCTION
FinTech companies are technology companies that provide solutions to the traditional and emergent
financial services industry and address a vast array of segments, including:
- support, maintenance and provisioning of existing infrastructure like switches, payment gateways,
card schemes, ATMs and cash collections;
- payments including mobile payments, wallets, remittances and stored value coupons;
- financial software including risk management, payments, core banking and capital market
software, loan origination etc.;
- platforms including peer-to-peer trading, aggregators, asset and wealth management; and
- data analytics and advisory services, including credit reference, credit scoring, insurance data,
risk management, fraud detection, compliance and reporting.
The dramatic convergence of digital interaction with financial transactions is disrupting traditional
financial services firms and creating new market opportunities for emergent financial services firms.
The rapid pace of technological change is forcing traditional financial institutions globally to invest in
innovation and to rethink their business models in order to exploit this emerging financial technology.
The FinTech segment has witnessed dramatic growth and has attracted considerable investment in
developed economies.
M-FiTEC was formed and incorporated in Johannesburg, South Africa on 19 August 2015, by the
Directors as a holding company which will participate in the growth of the FinTech sector, principally in
developing market geographies. The Company’s business and investment strategies will be managed
by the Board, which intends to position M-FiTEC to:
- pursue viable investment opportunities in the FinTech sector, principally in developing market
geographies;
- build a portfolio of profitable technology and services businesses which provide platforms,
applications and solutions to both existing and emerging financial institutions; and
- create Shareholder value through both capital appreciation and the payment of annual dividends.
The Directors, who include experienced FinTech executives, finance and private equity professionals,
possess the necessary credibility, reputation, and expertise to raise the requisite funds and execute
the appropriate acquisition strategy. They are also endowed with the following key attributes:
- access to proprietary deal flow (through networks and reputation);
- industry knowledge and public company experience; and
- a strong track record of value creation.
While M-FiTEC is currently considering a number of acquisitions, no formal binding agreements have
been entered into, in accordance with the Listings Requirements pertaining to a SPAC.
2. BUSINESS STRATEGY AND ACQUISITION CRITERIA
2.1 Business Strategy
2.1.1 Overview
M-FiTEC aims to build a FinTech group focusing on developing markets through
executing Shareholder approved acquisitions in an increasingly attractive investment
segment. M-FiTEC seeks to achieve revenue targets of a billion Rand within two years
and a billion Dollars within ten years, while keeping with the Company’s intended
strategy of obtaining a minimum EBITDA margin target of 10% on revenue.
Numerous macro themes support growth in the FinTech sector, particularly in
developing markets, including growth in GDP and populations, an emerging middle
class, increasingly high mobile phone penetration, growing high-speed internet access,
and in Africa, the eagerness of consumers willing to embrace digital and personal
finance innovations.
The Board believes that Africa presents important and valuable opportunities in the
FinTech sector, and has therefore begun to explore investment opportunities in this
regard with the aim of establishing a foothold in the industry.
2.1.2 Strategic business objectives
M-FiTEC intends to pursue a ‘buy and build’ plan and acquire FinTech investments,
either with immediate control or with a path to obtaining a controlling stake over time.
The Board aims to ensure that the aggregated businesses can achieve greater
performance as a part of the M-FiTEC group than they would be able to achieve on
their own. M-FiTEC will assist these companies through the creation of market access,
scale and capital for growth.
The Board aims to ensure that a culture of trust and mutual respect is fostered between
employees, management and Shareholders through its ethical and sustainable
approach to business.
The Board aims to create Shareholder value through tight management controls, capital
appreciation and annual dividend payments.
The Board, which has a substantial business network across the African Continent, has
already identified several Viable Asset acquisition opportunities and which could be
completed within the Listings Requirements’ prescribed timeframe.
2.2 Acquisition criteria for Viable Assets
M-FiTEC is a FinTech investment holding company focused on acquiring and developing Viable
Assets initially in South Africa and sub-Saharan Africa and in larger developing markets.
Combining its commercial and financial skills, the Board will thoroughly assess each opportunity
to acquire Viable Assets on its own particular merits with reference to the investment criteria
which have been established by the Board.
The acquisition of Viable Assets must be approved by a majority of disinterested directors and
by an ordinary resolution of Shareholders in general meeting. The companies that are under
consideration must meet the criteria to list on AltX themselves.
Acquisition criteria shall include an assessment of historical performance of the targets,
potential future growth as well as the potential for the target to achieve benefits as part of the M-
FiTEC group.
The Company shall seek to make sizable anchor investments in either of the major categories
of Software and Services, Payments and Platforms followed by numerous smaller bolt-on
acquisitions to support anchor purchases down the line. Aside from anchor investments, the
Company aims to acquire companies in the R20 million to R200 million EV space.
Anchor investments should ideally have earnings between R20 million and R50 million while
bolt on opportunities will have profits between R2 million and R20 million.
M-FiTEC is not limited to only a single acquisition of Viable Assets but to the extent that the
Company undertakes more than one acquisition, these will be completed concurrently within the
permitted timeline and subject to the same shareholder vote.
2.2.1 Quantitative factors
- an attractive target return on investment potential of greater than 25% for each
acquisition;
- established businesses with revenue and profit history;
- good revenue and profit, with tangible growth potential;
- businesses with referenceable client bases;
- favourable free cash flow generation;
- above industry related gross margins; and
- hard currency revenue potential.
2.2.2 Qualitative factors
- an opportunity to participate in platform growth through consolidation in key target
segments;
- owned intellectual property or exclusive distribution relationships with major players
in the FinTech industry;
- strong competitive position within the relevant industry and geography;
- business model with potential at scale;
- experienced owner operators and/or strong management team;
- benefits from being part of a public company;
- a strong culture and values fit; and
- cross-selling and synergies potential within the M-FiTEC group.
Acquisitions will be spread initially across sub-Saharan Africa with priority areas being Southern
Africa, West Africa and East Africa. In time, the opportunity set will be extended to other
developing markets where the industry dynamics are similar.
The acquisition criteria considered by the Company may not be changed unless a resolution is
passed at a meeting of Shareholders by achieving a 75% majority of the votes cast to that effect.
3. RATIONALE FOR LISTING
3.1 Permanent Capital
M-FiTEC has raised sufficient capital to list as a SPAC in order to pursue the acquisition of
Viable Assets and may raise further capital once Viable Assets have been identified and a
transaction determined. The Board considers the Company’s main competitors to be private
equity funds, which have mandates to return capital to investors within a defined timeline. Often
in growth investing this period is too short to maximise the potential of the business. A listing on
a well-regulated exchange eliminates the fixed deadline and rather incentivises management to
focus on the true value of an investment and the ability to generate long-term cash flow.
Investing and divesting should be driven by maximisation of profitability to the Company, and
not by a predetermined mandate specifying a divestment deadline.
3.2 Shares as currency
Listed paper behaves much like currency for the issuer. It creates an additional degree of
freedom which allows the Company to utilise shares as consideration for an acquisition. Where
an investment into an asset is possible at a price to earnings ratio which is favourable to that of
the acquirer, use of the Company’s listed shares becomes a cost effective means of investment
and therefore has the potential to enhance investor returns.
3.3 Profile
Credibility, transparency, corporate governance and trust are associated with a JSE-listed
company. The Board believes that the Company will be in an advantageous position to develop
its brand and the brands associated with its future acquisitions.
3.4 Attraction and retention of key staff
The Directors believe that the Company’s enhanced profile as a listed company will attract and
retain strong, experienced staff and management teams of target acquisitions to the M-FiTEC
group.
3.5 Attraction to targets
The M-FiTEC vehicle represents an attractive opportunity for targets as it enables flexibility
around settlement consideration, is minimally disruptive to the organisation and provides
potential capital gains tax rollover relief for share-based settlements.
4. DIRECTORS
The full names, ages, designations, qualifications and addresses of the Directors are as follows:
Name Designation/Role Qualifications Address
Charles Rowlinson Chief Executive Officer BAcc, MBA, Augusta @ Inanda
(60) CA(SA) Greens, 54 Wierda Road,
Sandton, 2196
Kevin Boyers (58) Chief Financial Officer BCom, BAcc, Augusta @ Inanda
CA(SA) Greens, 54 Wierda Road,
Sandton, 2196
Gregory Voigt (52) Chief Investment Officer BCom, BCompt Augusta @ Inanda
(Hons), CA(SA) Greens, 54 Wierda Road,
Sandton, 2196
Richard Came (57) Independent Non- BA, MBA 55 St Patrick Road,
executive Chairman Houghton,
Johannesburg, 2198
Robin Frew (56) Independent Non- B.Bus Sci, 42 Main Road, Lakeside,
executive Director, B.Compt (Hons) Cape Town, 7945
Member of the
Remuneration
Committee
Christopher Lister Independent Non- BCom, HDip Acc, Ground Floor, Unit 9B, 3
James (55) executive Director, HDip Tax, CA(SA) Melrose Boulevard,
Chairman of the Audit Melrose Arch, 2076
and Risk Committee,
Member of the
Remuneration
Committee
Sabir Munshi (54) Independent Non- BSc (Computer 29 Seventh Street,
executive Director, Science) Houghton Estate, 2198
Member of the Audit
and Risk Committee,
Chairman of the
Remuneration
Committee
Colin Rezek (60) Independent Non- BCom, MBA Ground Floor, Unit 9B, 3
executive Director Melrose Boulevard,
Melrose Arch, 2076
Andrew Springate Independent Non- Matric 18 Thornhill Office Park,
(55) executive Director, Bekker Road, Midrand,
Member of the Audit Johannesburg, 1685
and Risk Committee
5. DEFERRED ORDINARY SHARES
Each Director has subscribed for and been issued 200 000 Deferred Ordinary Shares at a subscription
price of R0.001 per Deferred Ordinary Share, constituting a total of 1 800 000 Deferred Ordinary
Shares in issue.
No further Deferred Ordinary Shares shall be issued by the Company.
No voting rights shall attach to the Deferred Ordinary Shares, save only as provided for in section
37(3)(a) of the Companies Act. The Deferred Ordinary Shares shall not be entitled to participate in any
profits of the Company and no dividends or any other distributions by the Company shall be declared
or paid in respect of the Deferred Ordinary Shares.
The Deferred Ordinary Shares are unlisted and shall not be transferable whether by delivery,
registration or otherwise.
On the first business day following the successful completion of an acquisition of Viable Assets, each
Deferred Ordinary Share shall forthwith, and without the need for further resolution of the Board or of
the Shareholders, be automatically and compulsorily converted once off on a one-for-one basis into,
and be re-designated as, a Share, providing what the Board believes to be an effective mechanism of
aligning the interests of the Board with that of M-FiTEC’s Shareholders.
6. LISTING ON THE JSE
The JSE has granted M-FiTEC a Listing in respect of 7 618 594 Shares on AltX under the abbreviated
name “M-FiTEC”, share code “MFI” and ISIN ZAE000209607, with effect from the commencement of
business on Tuesday, 17 November 2015.
7. COPIES OF PRE-LISTING STATEMENT
The Pre-listing Statement is available in English only, and copies may be viewed on the Company’s
website: www.m-fitec.com or during normal business hours from 10 November 2015 until 17 November 2015,
at the addresses set out below:
- M-FiTEC, Augusta @ Inanda Greens, 54 Wierda Road, Sandton, 2196;
- Merchantec Capital, 2nd Floor North Block, Hyde Park Office Tower, corner 6th Road and
Jan Smuts Ave, Hyde Park, Johannesburg, 2196.
Johannesburg
10 November 2015
Corporate and Designated Adviser and Lead Arranger
Merchantec Capital
Attorneys
Prinsloo, Tindle & Andropoulos Inc.
Auditors and Independent Reporting Accountants
Grant Thornton
DISCLAIMER
This abridged Pre-listing Statement does not constitute an offer to the public for the sale of or
subscription for, or the solicitation of an offer to buy and/or subscribe for, shares as defined in the
Companies Act, 2008 (Act 71 of 2008), as amended (the “Companies Act”) and will not be distributed
to any person in South Africa in any manner which could be construed as an offer to the public in
terms of the Companies Act. This abridged Pre-listing Statement does not constitute a prospectus
registered and/or issued in terms of the Companies Act.
This abridged Pre-listing Statement includes statements about M-FiTEC that are, or may be deemed
to be forward-looking statements. All statements other than statements of historical fact are, or may be
deemed to be, forward-looking statements. These forward-looking statements are not based on
historical facts, but rather reflect current expectations concerning future results and events and
generally may be identified by the use of forward-looking words such as “targets”, “believe”, “aim”,
“expect”, “project”, “anticipate”, “intend”, “foresee”, “forecast”, “likely”, “should”, “planned”, “may”, “will”,
“estimated”, “potential” or similar words and phrases.
Examples of forward-looking statements include statements regarding a future financial position or
future profits, cash flows, corporate strategy, estimates of capital expenditures, acquisition strategy, or
future capital expenditure levels, and other economic factors, such as, amongst other things, interest
and exchange rates and public sector spend and resource allocation.
By their nature, forward-looking statements involve known and unknown uncertainties, assumptions
and other important factors, because they relate to events and depend on circumstances that may or
may not occur in the future, whether or not outside of the control of M-FiTEC. Such factors may cause
M-FiTEC’s actual results, financial and operating conditions, liquidity and the developments within the
industry in which M-FiTEC intends to operate to differ materially from those made in, or suggested by,
the forward-looking statements contained in this abridged Pre-listing Statement. M-FiTEC cautions
that forward-looking statements are not guarantees of future performance.
All these forward-looking statements are based on estimates and assumptions made by M-FiTEC, all
of which estimates and assumptions, although M-FiTEC believes them to be reasonable, are
inherently uncertain. Accordingly, no assurance can be given that any such forward-looking
statements will prove to have been correct. Any forward-looking statement made in this abridged Pre-
listing Statement or elsewhere is applicable only at the date on which such forward-looking statement
is made. New factors that could cause the business of M-FiTEC not to develop as expected may
emerge from time to time and it is not possible to predict all of them. Further, the extent to which any
factor or combination of factors may cause actual results to differ materially from those contained in
any forward-looking statement is not known. M-FiTEC has no duty to, and does not intend to, update
or revise the forward-looking statements contained in this abridged Pre-listing Statement after the date
of this abridged Pre-listing Statement, except as may be required by law or regulation.
Date: 10/11/2015 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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