Dawie de Villiers: How Alexander Forbes plans to use the R1.94bn from short-term insurance unit sale

South African financial services group, Alexander Forbes, recently completed the sale of its short-term insurance business to Momentum Metropolitan. The Chief Executive Officer, Dawie de Villiers, shared insights on the competitive process that led to the sale and the company's strategic plans for the capital injection during an interview with CNBC Africa. De Villiers highlighted the significant interest in the business from both local and international companies, with over 20 companies initially expressing interest in the niche market that the short-term insurance unit operated in. The competitive nature of the process ultimately led to nine non-binding offers, demonstrating the value and potential of the business beyond its market value. When asked about the price achieved through the sale, De Villiers expressed satisfaction with the outcome, emphasizing that assets like the short-term insurance business, which operate in specialized and niche markets, are rare and often command a premium due to their unique positioning. This premium pricing indicated the strategic value that the potential buyers saw in the business. Regarding the utilization of the proceeds from the sale, De Villiers stated that the majority of the funds would be returned to shareholders. Alexander Forbes had been holding cash reserves from previous sales and was now looking towards potential acquisitions in the future. The CEO mentioned that while acquisitions were on the horizon, the focus for now would be on returning value to shareholders and evaluating opportunities for the deployment of the remaining capital. De Villiers discussed the future of the company post-sale, highlighting the core focus on administration, consulting, and investment services within the regional Alexander Forbes entity. With the influx of capital from the sale, the company aims to scale up and enhance its existing operations, concentrating on driving success in its core business areas. In light of the current market conditions in South Africa, De Villiers expressed optimism about potential opportunities for further consolidation within the financial services industry. He alluded to the lean and agile nature that the company had adopted in response to challenging market conditions, positioning them well for future growth and expansion. As discussions turned to potential acquisitions, De Villiers acknowledged the sizable capital position the company now finds itself in, with approximately R1.94 billion at its disposal following the sale. While acknowledging the potential debt repayments, De Villiers indicated that the focus would primarily be on strategic acquisitions that align with the company's growth objectives. Looking ahead, De Villiers mentioned that the company would begin assessing acquisition opportunities in the market, aiming to finalize deals in the upcoming financial year. The strategic deployment of the capital from the sale of the short-term insurance business signifies a pivotal moment for Alexander Forbes as it navigates its path towards future growth and value creation for its stakeholders.