Botswana Insurance Holdings Limited (BIHL), a leading insurance and asset management company wanted to buy Funeral Services Group (FSG) at a ‘cheap’ price, hence FSG shareholders’ turndown of the offer, BG Business has learnt. The information comes two weeks after BIHL announced that it has withdrawn from the negotiations without stating detailed reasons for the action.
The BIHL group Chief Executive Officer (CEO) Gaffar Hassam last week however told BG Business that the negotiations did not bear fruit because BIHL did not follow the right procedure of negotiations. This is despite the fact that Mike Nikolic, FSG Group Managing Director (MD) on the other hand said shareholders of the leading undertakers decided not to let go of their shares to BIHL which is already a shareholder in the company through its 100 percent subsidiary Botswana Life Insurance Limited (BLIL), at around 28 percent.
“There is nothing more to say beside that shareholders decided not to sell their shares,” said Nikolic shying away from revealing reasons why the shareholders decided not to sell. However, Karabo Tladi an independent analyst at Ipro Botswana, a fund management company, said it was obvious that shareholders of FSG would not let go of a profit making company like FSG. “ They realised the company was more valuable to them under their ownership,” Tladi said. He suspected that BIHL must have offered an unattractive offer to the pan-African undertakers. BG Business is reliably told that BIHL had offered to buy all shares of BIHL at around P255 million, just a slight figure above the company’s market value of around P218 million.
“FSG is also expanding vigorously especially into other African markets. The company’s revenue is growing and so does profits, so to shareholders it is very valuable,” Tladi said. According to FSG’s financial statement for 2012 Full Year (FY) revenue bubbled 13 percent to stand at P98 million, from P86 million of the previous same period.Nikolic attributed this to the growth of their foreign businesses especially Zambian subsidiary revenue. “We will continue to explore foreign markets and wherever there is an opportunity we will open a subsidiary,” Nikolic told BG Business previously.
Coincidentally, Tladi said FSG’s business nature is also elastic such that the company is hardly affected by economic performance.