Unum Market Commentary: JSE Stable As Rand Gains On Inflation Da
Wednesday saw the release of a key piece of SA economic data which helped the Rand gain versus the major currencies. Inflation for the month of August (YoY) came in at 4.9% versus a prior reading of 5.1% and consensus forecast of 5.2%. This saw the Rand gain by approximately 27 cents versus the US Dollar, closing the session just above the R14.60 level from a Tuesday session close of R14.90. A weaker US Dollar also saw metals strong on the day which in turn helped Anglo American plc add 4.11% for the session, while Mr Price and Sanlam added 3.86% and 3.52% respectively. On the downside, Aspen continued to be under significant selling pressure, shedding nearly 8%. In Europe, markets remained buoyant with the DAX, FTSE and CAC40 adding 0.50%, 0.42% and 0.56% respectively. Overnight US stocks closed as follows: Dow Jones (+0.61%), S&P500 (+0.13%), Nasdaq (-0.08%). This morning in Asia, equities are flat to down.
REMINDER: Today at 3:00pm the South African Reserve Bank will announce it's interest rate decision.
JSE Major Sectors
Resources 10 +1.27%
Industrial 25 -0.99%
Financial 15 +1.41%
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Unum Capital Economic Calendar: unum.co.za/economic-calendar/
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In currencies, the South African Rand trades as follows:
USDZAR -0.23% to 14.66
GBPZAR +0.16% to 19.28
EURZAR +0.15% to 17.12
Gold trades at $1210
Platinum at $825
Brent Crude Oil at $79.64
International Markets
This morning, Asian equities are as follows:
Nikkei 225 (+0.24%)
Hang Seng (-0.03%)
Shanghai Composite (-0.12%)
Latam Markets closed as follows:
Merval 25 (+3.15%)
Bovespa (-0.19%)
INMEX (-0.20%)
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Company News
Life Healthcare Group Holdings Limited - Disposal of interest in Max Healthcare Institute Limited and withdrawal of cautionary announcement
Further to the cautionary announcement released on the Stock Exchange News Service on 27 August 2018, shareholders are advised that the Company through its wholly owned subsidiary, Life Healthcare International Proprietary Limited, has accepted an offer from the global investment firm Kohlberg Kravis Roberts & Co. LP. for and on behalf of funds and/or investment vehicles managed by it together with its affiliates ("the Purchaser") to acquire its 49.7% stake in Max Healthcare Institute Limited ("Max Healthcare") ("the Transaction"). The Purchaser may complete the transaction through its portfolio company, Radiant Life Care Private Limited.
2. THE TRANSACTION
Rationale
Exiting its joint shareholding investment in Max Healthcare will further enable Life Healthcare to focus on its core operations in South Africa, UK, Poland and Western Europe. The Company will initially use the net disposal proceeds to settle debt as well as to invest in growth opportunities in its core markets.
Terms of the Transaction
Subject to the terms and conditions to be mutually agreed in a share purchase agreement, the Purchaser will acquire 266,997,937 equity shares held by Life Healthcare International Proprietary Limited, which represents 49.7% of the share capital of Max Healthcare, at Rupees 80 per share for approximately R4.3 billion before costs and the impact of exchange rate fluctuations (the R4.3 billion is an indicative amount based on the rate of exchange as at 19 September 2018, R1 = Rupees4.93). The final amount will be determined based on the rate of exchange when the transaction is finalised. The transaction is currently expected to be finalised and become effective before the end of December 2018.
The business of Max Healthcare
Max Healthcare is a leading hospital group in India. The business operates state of the art hospitals in Delhi-NCR, Punjab and Uttarakhand. Life Healthcare acquired an initial stake of 26% in Max Healthcare in 2012 and subsequently increased its stake to 46.25% in 2014. Following the acquisition of half of the International Finance Corporation’s interest in 2017, Life Healthcare increased its stake in Max Healthcare to 49.7%.
The consideration
The total consideration for Life Healthcare’s stake in Max Healthcare will be settled in cash. The Company will initially utilise the net proceeds (less estimated costs and taxes) from the disposal to settle debt as well as to invest in growth opportunities in the Company’s core markets.
Financial effects of the Transaction
Max Healthcare is equity accounted for in the published unaudited interim Group results. The investment’s book value as at 31 March 2018 amounted to R2.893 billion (30 September 2017: R2.960 billion). The net loss after tax for the period ended 31 March 2018 was R67 million (30 September 2017: R27 million).
3. CONDITIONS
The implementation of the Transaction is subject to the fulfillment of the following:
- the negotiation and entry into a mutually agreed share purchase agreement to be approved by the Boards of the Company and the Purchaser;
- the satisfaction of the conditions to be set out in the share purchase agreement including necessary regulatory and other approvals required in India being obtained;
- the waiver by Max India of its pre-emptive rights under the existing shareholders’ agreement; and
- finalisation of Warranty & Indemnity Insurance on terms acceptable to the Purchaser.
4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Given that the material terms of the Transaction are contained in this announcement; caution is no longer required to be exercised by shareholders when dealing in their Life Healthcare shares.
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FANGs
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Tel: 011 384 2929
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