Johannesburg — FINANCIAL services group PSG had abandoned plans to list on the London Stock Exchange, citing market volatility and the effect of the US subprime crisis on international markets, chairman Jannie Mouton said yesterday.

This comes hot on the heels of reports that Investec's London-based unit had written down R500m because of its exposure to the subprime crisis in the year ended September.

FirstRand, which had been exposed to the subprime debacle to the tune of $1,5m, said in November that it had sold its portfolio.

PSG shares retreated 0,2% to R24,70 on the JSE, valuing the company at R4,7bn. The stock has shed 13% in the past six months.

PSG, which has interests in insurance, stockbroking, money management and banking, got shareholder approval last August to issue 18-million shares to raise about R400m on London's alternative investment market to fund acquisitions that would boost its annuity income.

Mouton said in October that PSG Group's annuity income stream was gaining momentum, and that the group's income was becoming increasingly "less sensitive" to market movements.

The group lifted interim recurrent headline earnings 153% to R123m, while recurring headline earnings per share for six months to August grew 72% to 78c.

Yet the 24% decrease in PSG's headline earnings per share to 185c was due to the absence of market-to-market profit from investment in the JSE, he said. Mouton said yesterday the subprime crisis had made it difficult to raise money overseas.

"We had a good look at listing in London about seven months ago but things changed so we decided to drop the idea. The rationale for not proceeding with the secondary listing includes market volatility and the negative perception of financial institutions in the global market because of the subprime situation. PSG will continue to pursue investment opportunities both in SA and abroad," the PSG chief said.

In the six months to August PSG, which holds 34,9% of mass-market lender Capitec Bank, said its wealth management unit, PSG Konsult, had more than doubled its funds under administration from R23bn a year to more than R50bn.

PSG Konsult was opening its first office in London to give clients an opportunity to make overseas investments. It had also acquired 80% of Alternative Channel, an insurance company and provider of linked investment products.

Zeder Investments, the listed agricultural investment company managed and 36%-owned by PSG, experienced a busy period with several corporate actions.

The company grew its shareholding in Kaap Agri to 22% by swapping its 6% stake in Pioneer Foods for another 17% stake in Kaap Agri. This in turn lifted its stake in Pioneer Foods to 28%.

Paladin Capital, which holds the majority of PSG's private equity investments, acquired 25,1% of niche property finance house Mainfin, and invested another R56m of capital in Precrete Nozala.