Sygnia just sent out the pre-listing statement:
SYGNIA LIMITED
(formerly Sygnia Investment Holdings No 2 Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2007/025416/06)
Share code on the JSE: SYG ISIN: ZAE000208815
("Sygnia" or "the Company" or “the Group”)
ABRIDGED PRE-LISTING STATEMENT
This abridged pre-listing statement (“Abridged Pre-Listing Statement”) relates to:
an offer for subscription by Sygnia (R237,256,606) and an offer for sale by an existing shareholder
(R25,032,000) to eligible investors of up to 31,224,834 Sygnia ordinary shares (“Placing Shares”) at a
price of R8.40 per Placing Share (“Private Placing Price”) for an aggregate amount of R262,288,606
(“Private Placing”); and
the subsequent listing by way of private placing of up to 137,178,000 Sygnia ordinary shares on the
Main Board in the Financial Services sector of the JSE Limited (“JSE”) under the abbreviated name
“SYGNIA” and having the JSE share code “SYG”, with effect from the commencement of business on
Wednesday, 14 October 2015 (“Listing”).
This Abridged Pre-Listing Statement is not an invitation to the public to subscribe for, or an offer to the public
to purchase, Sygnia ordinary shares, but is issued in compliance with the JSE Listings Requirements
(“Listings Requirements”) for the purpose of giving information to the public with regard to Sygnia.
Subscriptions in terms of the Private Placing are only allowed for a minimum amount of R1,000,000 per
single addressee acting as principal except in the case of persons falling within one of the specified
categories listed in section 96(1)(a) of the Companies Act, No.71 of 2008.
This Abridged Pre-Listing Statement contains the salient features of the Company, the Private Placing and
the Listing and as such is not intended to be comprehensive. For a full appreciation of the Company, the
Private Placing and the Listing, the pre-listing statement published on Thursday, 1 October 2015 (“Pre-
Listing Statement”) should be read in its entirety. All words and terms in this Abridged Pre-Listing Statement
have meanings as defined in the Pre-Listing Statement.
1.
INTRODUCTION TO SYGNIA
Sygnia is a specialist financial services group headquartered in South Africa focusing on the provision
of investment management and administration solutions to institutional and retail clients predominantly
located in South Africa.
The main services provided by Sygnia include multi-manager investment solutions, index-tracking
investment solutions, customised/bespoke investment strategy management, transition management
and investment administration/platform services. The primary institutional clients span both the private
and public sector and include retirement funds, umbrella funds, life insurers, third party multi-
managers, endowments and other special purpose funds. The primary retail clients include individual
members and beneficiaries of retirement funds, as well as the wider individual savings market.
Sygnia’s principal geographic focus is South Africa, where it has been operating in its current form
since November 2006. Sygnia managed and administered assets of R137 billion as at 30 June 2015.
As at 30 June 2015 Sygnia employed 114 people, including actuaries, chartered accountants, lawyers
and investment professionals. The founding shareholders of the Group have worked together since
2003. The core management team has worked together for 10 years.
2.
KEY COMPETITIVE ADVANTAGES
The key determinants of Sygnia’s success, and its main competitive advantages, include:
The management team has a wealth of experience in the field of asset management and
retirement fund consulting, and a deep understanding of the institutional and retail markets in
South Africa;
The management team has a successful track record of organically building entrepreneurial
businesses and creating shareholder value;
Sygnia’s proprietary multi-manager administration systems are market leaders in South Africa
and make Sygnia’s services highly scalable;
The Group has built up a strong reputation for offering client service excellence, strong
performance, transparency and fairness of costs and charges. The culture of putting the
customer first is ingrained in the manner in which Sygnia operates;
The Group has long-standing relationships with many leading employee benefits consulting,
investment consulting and financial advisory businesses in South Africa. This will support its
future institutional and retail growth;
Sygnia is well-positioned to take advantage of the changing regulatory dynamics;
Sygnia has a reputation for innovation and being a ‘market disruptor’ within the financial
services industry in South Africa. The desire to innovate through thoroughly-considered,
unconventional and contrarian business strategies continues to drive strategy; and
The Group has a growing revenue base, whilst being a highly cash generative business.
3.
GROWTH STRATEGIES
Sygnia has identified multiple areas of future growth and expansion, all of which are able to be
pursued due to the highly scalable operational and regulatory infrastructures that have been put in
place over the past seven years.
The core areas of growth are:
Institutional multi-manager business
Sygnia’s investment performance has been consistently strong relative to its peers. Sygnia has made
strong in-roads into the institutional client bases of small to medium sized employee benefits
consulting companies in South Africa. It has not, however, made any in-roads into the client bases of
certain large employee benefits consulting companies that support multi-management. Those client
bases present a significant business opportunity for Sygnia going forward, as Sygnia is able to offer
an attractive alternative to the existing multi-management arrangements.
Institutional investment administration/platform business
Sygnia’s investment administration is regarded as a market leader. The Group is thus uniquely placed
to take advantage of the growing demand for platform services among large institutional investors,
including parastatals, municipalities and umbrella funds.
Index-tracking investment management
Sygnia has a 12-year performance track record in managing index-tracking funds. There is a growing
demand for low cost products, such as index-tracking funds, among both institutional and retail
investors in South Africa as both stand-alone solutions as well as part of a balanced fund solution.
Market penetration of index-tracking funds is currently extremely low, however this is likely to change
rapidly given that these funds enjoy the benefits of low cost and the support of the regulators.
Funds of South African hedge funds
Sygnia has a 12-year performance track record in successfully managing funds of South African
hedge funds. The growth in this product category has been slow, impeded by the non-supportive
regulatory environment. However, given the recent changes in regulation declaring hedge funds as
Collective Investment Schemes under Government Notice 141, which will allow certain hedge funds to
be marketed to the retail public, as well as the changing investment environment dynamics becoming
more supportive of capital preservation type strategies, the profile and attractiveness of hedge fund
investments is expected to grow, with most investors preferring to access hedge funds through a fund
of hedge funds.
Retail multi-manager business
Sygnia’s multi-manager funds are enjoying growing support among the financial advisory market due
to the cost-effectiveness of the proposition and strong investment performance. Sygnia’s penetration
of the independent financial advisory market is still relatively low and offers a significant opportunity for
growth.
In addition, the proposed regulatory reforms to retail distribution means that Sygnia’s traditional client
base is likely to look for retail solutions in order to meet proposed regulatory requirements.
Retail investment administration/platform/LISP business
Sygnia’s Linked Investment Service Provider (“LISP”) platform is supported by a constantly evolving
systems-platform and analytical tools. The cost-effective pricing, together with a stable systems
infrastructure, means that Sygnia is becoming increasingly attractive to the direct investor, as well as
to financial advisors who are looking to reposition themselves in terms of business support in light of
the changing regulatory environment.
Securities business
Sygnia’s securities business was launched in 2014 to support Sygnia’s index-tracking and other
investment activities. This business aims to attract third party stockbroking clients and individual share
investors.
In terms of market segment penetration, Sygnia has limited exposure to the following market
segments, which all present significant growth opportunities:
4.
public sector institutions and funds; and
certain large employee benefits consulting companies that support multi-management.
DIRECTORS
The full names, ages, qualifications, nationalities, business addresses and functions of the directors of
Sygnia are set out below:
Directors
Executive
Magdalena Franciszka Wierzycka (45)
BBusSc (Actuarial), PhDip (Actuarial), FFA, FASSA,
CFP
South African/Polish
Niki Jane Giles (40)
CA(SA), CFA, BBusSc (Finance)
South African
Non-executive
Haroon Ismail Bhorat (46)
PhD (Economics), M.A (Economics), BA (Economics),
BA HONS (Economics and History)
South African
Kenneth Thomas Hopkins (60)
CA(SA), B Com (Hons)
South African
Isiah Kaizer Moyane (43)
BA, LLB
South African
Shirley Anne Zinn (54)
BA, HDip (Education), B.Ed Hons, M.Ed, Ed.M
(Harvard), Ed.D (Harvard)
South African
Business address
7th Floor, The Foundry, Cardiff
Street, Green Point, 8001
Function
Chief Executive Officer
7th Floor, The Foundry, Cardiff
Street, Green Point, 8001
Financial Director
Room 3.32, School of Economics
Building, Middle Campus,
University of Cape Town
Non-executive Chairman
10 Avenue Lombardie, Constantia,
Cape Town, 7806
Independent non-
executive director
Edcon Place, 12-16 Laub Street,
New Centre, Johannesburg
Independent non-
executive director
8 Amberfield, 50 West Road
South, Morningside, Sandton
Lead independent non-
executive director
5.
RATIONALE FOR THE PRIVATE PLACING AND LISTING
The reasons for the Private Placing and Listing are to:
enhance the Company’s public profile, brand recognition and general public awareness in order
to facilitate growth;
strengthen the balance sheet of the Company to provide it with sufficient headroom in terms of
the regulatory capital requirements and to enable the Company to pursue its organic growth
strategies faster than it has been able to do to date;
enable the Company to access capital markets, as and if required;
enable the Company to retain key management staff by offering them access to listed ordinary
shares in the Company; and
allow the Company to pursue its systems development strategies faster.
The net proceeds from the offer for subscription are estimated to be R232,506,606, after deducting
the estimated Private Placing and Listing expenses of R4,750,000. These net proceeds will be used to
increase the Company’s regulatory capital holdings, pursue systems development strategies, actively
market Sygnia’s brand and the profile of index-tracking, general research and development
expenditure, augment distribution channels and facilitate geographic expansion.
6.
THE PRIVATE PLACING
6.1
Particulars of the Private Placing
The Private Placing comprises an offer for subscription by Sygnia (R237,256,606) and an offer
for sale by an existing shareholder (R25,032,000) to eligible investors of up to 31,224,834
Placing Shares at the Private Placing Price for a total amount of R262,288,606.
The Private Placing Price at which the Placing Shares will be offered for subscription or for sale
pursuant to the Private Placing will be R8.40 per Placing Share.
6.2
Conditions to the Private Placing
In the opinion of the board of directors of Sygnia, a minimum amount of R225,501,653
comprising 26,488,292 Sygnia ordinary shares at the Private Placing Price, is required to be
raised by the Private Placing in order to achieve the objectives of the Private Placing and Listing
as set out in paragraph 5 above and to ensure the Company has the public shareholding
required by the Listings Requirements.
The Private Placing has not been underwritten and the offer for subscription is conditional upon
the minimum subscription being received that will fulfil the purpose of the Private Placing and
Listing.
The Private Placing and Listing remain subject to a spread of shareholders acceptable to the
JSE being attained. The Listings Requirements provide that, unless the JSE determines
otherwise, public shareholders, as defined by the Listings Requirements, must hold a minimum
of 20% of the ordinary shares on the day of Listing.
The Private Placing and Listing will not proceed if the JSE's shareholder spread requirements
are not acceptable to the JSE, and any acceptance of the Private Placing will not take effect
and no person will have any claim whatsoever against the Company, the selling shareholder or
any other person as a result of the Private Placing not taking effect.
6.3
Over subscriptions
The maximum number of Sygnia ordinary shares that can be subscribed for and acquired in
terms of the Private Placing is 31,224,834 ordinary shares. In the event of an over subscription,
ordinary shares will be allocated and issued at the discretion of the directors of Sygnia. Factors
to be considered by the Company in allocating ordinary shares include:
whether the applicant is a client of the Group;
achieving a spread of shareholders that is acceptable to the JSE;
promoting liquidity, tradability and an orderly after-market in the ordinary shares of the
Company;
the applicant’s Broad-Based Black Economic Empowerment (B-BBEE) status; and
the total amount applied for by respective applicants.
There is no preference on allotment to any particular company or group, save as set out above
in the event of an over subscription.
6.4
Dates and times of the opening and closing of the Private Placing
2015
Abridged Pre-Listing Statement released on SENS
Thursday, 1 October
Abridged Pre-Listing Statement published in the South African press
Thursday, 1 October
Opening date of the Private Placing (09h00)
Thursday, 1 October
Closing date of the Private Placing (12h00)
Thursday, 8 October
Notification of allotments
Friday, 9 October
Results of the Private Placing released on SENS
Monday, 12 October
Results of the Private Placing published in the South African press
Monday, 12 October
Listing date (09h00)
Wednesday, 14 October
Accounts at CSDP or broker updated and debited in respect of
Wednesday, 14 October
dematerialised shareholders
All dates and times are South African dates and times. The above dates and times are subject
to amendment. Any such amendment will be announced on SENS and published in the South
African press.
7.
SUMMARISED FINANCIAL INFORMATION OF SYGNIA
(Rands)
For the year ended
30 September 20151
For the year ended
30 September 2014
Revenue
Expenses
Operating profit
Finance income
Finance costs
Other income
Operating profit before tax
Income tax expense
Net profit for the period
Other comprehensive income
Total comprehensive income for the period
Profit attributable to:
Owners of the Company
Non-controlling interest
Weighted average number of ordinary shares in
issue
Basic and diluted earnings per share (cents)
Headline and diluted headline earnings per
share (cents)
Net asset value per share (Rand)
Tangible net asset value per share (Rand)
239 454 159
(168 871 122)
70 583 037
5 814 905
(196 071)
4 970 768
81 172 639
(23 319 532)
57 853 107
-
57 853 107
57 853 107
100 000 000
57.85
58.88
1.35
1.32
165 798 175
(125 998 291)
39 799 884
4 256 073
(61 229)
10 764 923
54 759 651
(16 294 133)
38 465 518
-
38 465 518
38 465 518
100 000 000
38.47
42.11
1.27
1.23
8.
1
The 30 September 2015 figures are an aggregation of the interim historical financial information of Sygnia for the 6
months ended 31 March 2015, the profit estimate for the 4 months ended 31 July 2015 and the profit forecast for the 2
months ending 30 September 2015.
COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-Listing Statement will be available during normal business hours at the Company’s
registered office (7th
Floor, The Foundry, Cardiff Street, Green Point, Cape Town) and the Company’s
office in Johannesburg (Unit 40, 6th Floor, Katherine and West Building, West Street, Sandton) from 1
October 2015. The Pre-Listing Statement may also be obtained from Sygnia’s website
(
www.sygnia.co.za).
Sponsor
Nedbank Limited, acting through its Corporate Finance business unit
Attorneys
Cliffe Dekker Hofmeyr Incorporated
Auditor and Reporting Accountant
KPMG Inc.
Reporting Accountant
Deloitte & Touche
Johannesburg
1 October 2015
