Smith New Court takes 30% stake in S African broker

SMITH New Court is to buy nearly a third of South Africa's leading institutional stockbroker, Davis Borkum Hare, and set up a New York joint venture with the firm, writes John Willcock.

SG Warburg is also expected to announce it is to join up with Ivor Jones, another South African broker.

Robert Fleming has already launched a joint venture with Martin & Co called Copthall Martin, which deals in South African equities outside the country.

Michael Marks, Smiths chief executive, said yesterday: 'This is a very exciting move for us. South African equities have been an important market to us for 70 years. South Africa is already a mature economy, not an emerging market, and with the ANC dedicated to abolishing exchange controls we can play a part in inward and outward investment.'

Smiths will hand over its existing US institutional sales activies in South African equities to DBH. In return, DBH will provide business and allow Smiths to tap in directly to the South African market. Smiths already does over a half of all published trading in South African shares in London and New York, said Mr Marks.

Smiths aims to help South Africa raise finance on the international money markets and channel US pension funds into the country, he said. The acquisition of 30 per cent of DBH will take six to twelve months because the South African parliament has to approve it.

He refused to say how much Smiths had paid for the stake, but it was 'not material in the context of Smiths'. Both firms will second staff to New York where they will set up an office separate from Smiths' existing business.

Mr Marks said Smiths was itself set up by two South Africans in 1926 - the original 'Smith brothers'.