Alexander Forbes puts plans on hold in light of Covid-19

Financial advisory firm Alexander Forbes has had to stop in its tracks to navigate the challenging Covid-19 induced economic uncertainty, announcing that it would postpone the major share buyback plan from Mercer that was revealed earlier this year. African Rainbow Captial’s acquisition of shares from Mercer is not affected by this decision.

Mercer Africa is the biggest shareholder in Alexander Forbes, currently controlling more than a third of the company, In January, Alexander Forbes announced that Mercer’s stake in the firm, which amounts to more than 440 million shares, would be bought back in combination between Alexander Forbes and ARC.

ARC already holds just under 20% of Alexander Forbes, and is planning to purchase another 15% to become the largest shareholder. This move will reportedly continue without delay, expected to come to a conclusion within a month, giving ARC a share of just under 34% in the company.

Alexander Forbes, meanwhile, planned to buy back the rest of the 200 million plus shares, as the firm looked to boost liquidity. This has been put on hold to wait out Covid-19. “As a result of the global economic turmoil caused by the Covid-19 pandemic, there has been a material change in market conditions and outlook and it is impossible to determine for how long this uncertainty will persist,” said Alexander Forbes in a statement.

The decision to put the buyback on hold, according to the firm, would “ensure its robust sustainability through the difficult economic conditions expected over the forthcoming months.” The move is not out of sync with the reaction of the broader business environment, as the world enters into a period of crisis and uncertainty.

Disruption to global supply chains and economic structures from the virus are unprecedented and so far unquantifiable. Most businesses are hunkering down, reducing spending and risk taking, while the government is doing its best to ensure a minimum degree of liquidity persists in the economy,

Alexander Forbes has been planning strategic expansion in recent years, not only in South Africa but across the broader continental economy as well. The firm will now have to put these plans on hold indefinitely,