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FINANCE GROUPS GREENWICH AND METTLE TO MERGE

Cape Town – Mettle, the specialist finance house whose empowerment partner is Hosken Consolidated Investments (HCI), would merge with the Greenwich Group, the listed financial services company, thus doubling its size, Mettle said yesterday, confirming market speculation. Mettle said in a statement that Greenwich would acquire all the issued shares in Mettle through the issue of 522,2 million new shares to Mettle shareholders. Mettle shareholders would end up with 68 percent of the merged company, while Greenwich would change its name to Mettle. The merger was expected to significantly lift the market capitalisation of the merged company from R193 million now. HCI would hold 33 percent of the enlarged Mettle, and management and the public the balance. There would be no retrenchments, and the merged company would increase staff soon, Mettle said. Mettle late last year postponed its planned listing because of bearish market conditions. Mettle had grown earnings at an average compound rate of 100 percent a year for the past five years while Greenwich’s average compound earnings growth rate had been 50 percent a year for the past three years. Gavin O’Connor, the chief executive of the enlarged Mettle to be listed on the JSE Securities Exchange by early next year, said the deal would achieve a number of strategic objectives for both parties. These included increasing the capital and client base, widening the product offering and allowing for cost savings. “It will establish a financial services company with niche and specialised product offerings,” O’Connor said. “The combination of interest rate and equity skills will offer structured solutions to both corporate borrowers and institutional investors, thereby creating a financial services company with a special product offering.” The major attractions in the deal for Mettle had been Greenwich’s strengths in corporate finance and derivatives, links to large institutions, and the fact that Greenwich also had a substantial office in London. Both had links with emerging markets, Greenwich in eastern Europe and Mettle in Africa. Colin Greff, the chairman of Greenwich, said Mettle would help diversify Greenwich’s income and bring in earnings outside financial markets. Mettle also had a forward annuity income book of more than R500 million over the next 10 years, which would allow for growth in the transaction-based side of the business, particularly offshore. Greenwich lost 5c to 90c yesterday on the JSE.

Source: Business Report – Lynda Loxton