Imara Holdings has announced the planned sale of one of its subsidiaries, the stockbroker Imara S.P. Reid (ISPR), to MMI Strategic Investments (MMI) for a maximum of R120m ($10.28m).

Details of the transaction, along with statutory information on IHL and notice of an extraordinary general meeting will be published in a circular to shareholders in January 2015, said Imara in its corporate announcement.

“As an investment banking group operating throughout Africa, IHL is continually reviewing opportunities available to it. With this in mind, the Board actively assesses the current markets and operations of IHL to ensure that returns to Shareholders are maximized,” said Imara.

ISPR is a well-established mid-sized stockbroker with over 70 years of experience in the South African Stock broking market.

ISPR provides a full range of broking services from traditional trade execution to full service stockbroking in local equities, derivatives and fixed interest instruments as well as trading and settlement access to Africa and international markets.

Mark Tunmer, Imara Holdings CEO, said that historically, ISPR has been an important contributor to the Imara Group, however, an increase in online share trading, escalating regulatory and compliance costs and generally changing market dynamics have led to growing pressure and competition and ultimately to a change in the Group’s strategic investment objectives.

“In response, several options were considered – principally, to invest further capital in the business or to pursue opportunities to exit the business. ISPR is an attractive investment within South Africa’s stockbroking industry and the IHL board considered several proposals from potential buyers,” he said.

“The purchase consideration to be received from MMI represents a premium to the current net asset value of ISPR. The board therefore believes a disposal under these terms is in the best interests of Imara,” he added.

MMI Strategic Investments is a 100% subsidiary of MMI Holdings, a South African financial services company.

MMI’s core business currently comprises of long and short term insurance, asset management, savings, investment, healthcare administration, health risk management, employee benefits, and rewards programmes.

The rationale for the acquisition of ISPR is MMI’s entrance into the stockbroking and portfolio management industry, which is viewed as a strategic long term growth strategy for the company.
The acquisition of ISPR enables MMI to take an established position in the retail stockbroking market, allowing MMI to offer a comprehensive suite of investment products to their clients.

“MMI has demonstrated their commitment to strengthening ISPR’s position in the local market and IHL is confident that current employees and clients of ISPR will benefit from the disposal,” said Imara.

Finalisation of the transaction is dependent on the approval by IHL’s shareholders voting in general meeting; and regulatory approval by the Johannesburg Stock Exchange, the Financial Services Board and the competition authorities.