Unum Market Commentary: Global Equities (Ex-USA) Ease As Trade T

On Tuesday, many traders and investors on the JSE most likely knocked off and called it a Tough Tuesday! If one looks at the scoreboard, it certainly appeared to be, with the All Share Index closing lower by 0.95% while the Top 40 Index was 1% in the red however well off the lows of the day. Leading the decline on the downside was Pepkor with a 3.26% decline (and which is approaching trend line support for a buy), MTN Group (-2.82%) and British American Tobacco (-2.80%). On the upside, shares that gained included Aspen Pharmacare (2.20%), RMI (+2.19%) and Nedbank (1.96%). Over in Europe, the DAX and FTSE100 closed slightly lower by 0.13% and 0.08% respectively while the CAC40 added 0.27%. On the day, out-performers in the Eurozone included Schneider Electric (+2.53%), Total (2.12%) and Airbus (+1.87%) while Bayer declined by 2.90%. In the United States, markets remained strong with the three major indices gaining meaningfully. This morning in Asia, indices trade at/near year-to-date lows as China seeking permission from the World Trade Organization to impose sanctions against the U.S.

JSE Major Sectors

Resources 10 -1.62%
Industrial 25 -1.14%
Financial 15 -0.03%

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Today on the local front, we have Sacci Business Confidence at 11:30am followed by Retail Sales at 1pm. For the rest of the week's local and international data, you may view the Unum Capital Economic Calendar by clicking on this link: www.unum.co.za/economic-calendar/


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In currencies, the South African Rand trades as follows:

USDZAR +0.29% to 15.10
GBPZAR +0.10% to 19.64
EURZAR +0.12% to 17.49

Gold trades at $1198
Platinum at $788
Brent Crude Oil at $79.31

International Markets

This morning, Asian equities are as follows:

Nikkei 225 (-0.40%)
Hang Seng (-0.42%)
Shanghai Composite (-0.33%)

Latam Markets closed as follows:

Merval 25 (-0.99%)
Bovespa (+2.33%)
INMEX (+0.15%)
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Company News

ADvTECH ADDS MONASH SOUTH AFRICA TO GROWING HIGHER EDUCATION PORTFOLIO

In terms of section 9.15 of the Listings Requirements, shareholders are advised that ADvTECH, through its subsidiary, The Independent Institute of Education Proprietary Limited, has agreed to the key terms of a proposed transaction with Monash South Africa Limited (MSA) and LEI AMEA Investments BV, which will see ADvTECH acquiring control of the MSA business (“the Business”), as well as the related property company, Laureate SA Proprietary Limited (“the Property Company”). Finalisation of the transaction is subject to the fulfilment of conditions relating to the proposed acquisition.

Africa’s largest private education group ADvTECH, continues to consolidate its position in the tertiary education sector with the acquisition of MSA, a leading South African private tertiary education institution with students from more than 50 countries. The acquisition will bring ADvTECH’s tertiary student complement to more than 40, 000 full time and 30, 000 distance students, along with a comprehensive suite of premium programs, an extensive executive education and training portfolio, and new highly sought-after programmes such as engineering and public health.

Rationale For The Transaction:

MSA, a joint venture between the prestigious Monash University and Laureate Education, Inc., the world’s largest private higher education network, offers a world-class education environment, with a strong track record for outstanding pass rates, qualification completion times and student employability, which perfectly complements ADvTECH’s existing offering. MSA’s reputation for academic excellence aligns with ADvTECH’s values and will support its growth strategy. The Independent Institute of Education (The IIE), ADvTECH’s higher education division, together with its existing brands Varsity College, Rosebank College and Vega and now MSA, positions us well to further develop our reputation as a leading private Higher Education provider.

The MSA campus, located on Johannesburg’s West Rand, is one of the largest private higher education precincts in the country. With a capacity for 6 500 students, it boasts extensive sports facilities, laboratories and 4 student residences, creating a university-like environment for students drawn from across the continent.

Prof. Alwyn Louw, CEO and Academic President of MSA, says MSA is excited about becoming part of ADvTECH, as well as the opportunities that a new steward with local insights, views and experiences will bring to the development of high-quality education for South Africa.
Commenting on the transaction, ADvTECH Group CEO Roy Douglas said: “We are delighted with the addition of MSA to our existing high-quality academic offering and look forward to integrating it into the group following the finalisation of regulatory and competition commission approval processes. MSA’s track record of academic excellence, along with its growth prospects, aligns perfectly with the strategic imperatives of ADvTECH.”

“Organic growth is a key measure of our business, and together with acquisitions that add value to our existing portfolio, form an important part of our strategy,” Douglas says.

This transaction follows a number of other recent acquisitions by ADvTECH in the Tertiary Education sector, including Capsicum Culinary Studio, The Private Hotel School and Oxbridge Academy.

EFFECTIVE DATE AND CONDITIONS PRECEDENT:
The transaction will become effective once all the conditions precedent to the offer have been met.
Conditions Precedent include the approval of the Competition Commission, approval of the Department of Higher Education and Training (DHET) and the Council on Higher Education (CHE), and any exchange control approvals which may be required in terms of the Exchange Control Regulations. All things being equal, it is expected that the Effective Date will be on or about 1 January 2019. Shareholders will be advised accordingly.

TRANSACTION CONSIDERATION & OTHER TERMS:
The transaction consideration will entail an amount of R343 million, plus cash on hand and working capital adjustments at Effective Date. In order to not fall foul of Section 9.8(d) of the Listings Requirements regarding being deemed a Category 1 transaction, a maximum consideration of R500 million has been agreed, however, based on current estimates of likely working capital adjustments, the final consideration is expected to be well below the maximum.

NET ASSETS & ATTRIBUTABLE PROFITS:
As at the audited last year end being 31 December 2017, the combined Net Asset Value (“NAV”) of the Business and the Property Company was R330 million.
The consolidated pro forma results of the business being acquired reflects a profit after taxation for the year ended December 2017 of R9,6 million. Significant synergies have already been identified and are expected to benefit the enlarged group. This forward looking statement has not been reviewed nor reported on by the Company’s external auditors.

MOI:
Laureate South Africa, the related property company will become a subsidiary of The Independent Institute of Education, a major subsidiary of ADvTECH. The MOI will be amended so as to conform to Schedule 10.21 of the Listings Requirements, as required.

CATEGORISATION OF THE TRANSACTION:
For purposes of categorisation, the transaction is deemed a category 2 transaction, given the maximum cash consideration payable, or potentially payable in terms of the agreed terms.

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Aus miners:
BHP Billiton (-0.61%)
Rio Tinto (-1.01%)
S32 (+0.28%)

FANGs
Facebook (+1.07%)
Amazon (+2.48%)
Netflix (+2.16%)
Google (+1.27%)

FTSE Miners:
Anglo American plc (+0.16%)
BHP Billiton plc (-1.24%)
Glencore plc (-1.32%)

Alibaba Holdings (+0.70%)
Tencent Holdings (+0.32%)

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The Unum Capital Trading Desk
Please feel free to contact the Unum Trading desk for any trade related queries : 011 384 29 29