PE firm CapitalSworks makes offer to acquire Peregrine Holdings

SOUTH AFRICAPrivate equity firm, Capitalworks has made an offer to acquire and delist Peregrine Holdings, a South African wealth and alternative investment company.

Peregrine Holdings has stakes in several business including Citadel Holdings, Peregrine Capital and Java Capital.

Capitalworks operates on an independent basis and has about US$1 billion of private equity funds under its management from international and domestic investors, including institutional investors, commercial banks, insurance companies, pension funds, family offices and high-net-worth individuals.

It invests in a diversified range of equity investments in mid-market companies operating principally in South Africa.

Peregrine’s shares rose as much as 16% after it revealed that private equity investors had made an offer to buy and delist the wealth manager from the JSE and A2X.

Capitalworks Atlanta is offering shareholders R21 per share (US$1.27) in cash to take the company private. However, they have the option of retaining unlisted stock in one of the buyout vehicles that have been set up to see the deal through.

Capitalworks has proposed a scheme of arrangement to implement the deal, with a general offer running concurrently.

If the scheme of arrangement, which requires 75% approval, doesn’t become operative, the general offer will kick in. The cash offer comes at a 21.7% premium to the level its shares were trading at on 30 October, the day before it first cautioned investors that it was in talks.

It will be adjusted for any dividends that are declared before the deal becomes operative. Eligible shareholders can also choose to take shares in “InvestCo” at a consideration of R17.40 (US$104) per offer share. The proposed transaction values Peregrine at about R4.5 billion (US$27mn).

Peregrine says the offer gives investors the opportunity to realise their investment in the company at a significant premium to its recent share price, while those who choose to retain their exposure will benefit from the support of Capitalworks as a key anchor shareholder.

It said the costs associated with maintaining a listing on the two exchanges would be eliminated.

Peregrine said shareholders representing 37.8% of its stock had already given irrevocable undertakings to support the offer. An independent board as well as the Peregrine board recommended that shareholders voted in favour of the deal pending an independent expert opinion from KPMG Services.

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