Stellar’s dynamo to step down
Market watchers sense an opportunity to restructure
Investment company Stellar Capital Partners, which has retail tycoon Christo Wiese as a significant shareholder, may be in line for a restructuring after CEO Charles Pettit announced that he would be stepping down. Pettit was instrumental in setting up Stellar from the remnants of the old ConvergeNet group.
Investment company Stellar Capital Partners — which has retail tycoon Christo Wiese as a major shareholder — may be in line for a restructuring now that CEO Charles Pettit has said he will be stepping down.
Pettit, who is regarded as a deal-making dynamo, was instrumental in setting up Stellar from the remnants of the old ConvergeNet group.
Stellar’s main investments include controlling stakes in asset management businesses Prescient and Cadiz as well as security technology business Amalgamated Electronic Corporation (Amecor). The company holds influential stakes in electronics manufacturer Tellumat and JSE-listed industrial conglomerate Torre.
Pettit was the prime mover in the founding of the R1.6bn-ayear Torre, which was built up by acquisition from the small (and struggling) SA French Ltd.
Stellar said in a Sens announcement that although Pettit would resign at the end of August, he would continue to serve as a director on the boards of certain investee companies and would also be available to assist the company with certain strategic projects. He would remain a significant minority shareholder in Stellar.
Pettit will be replaced by Peter van Zyl, who served as CEO from February to October in 2015.
Stellar chairman Dumisani Tabata said Pettit’s input would be missed. “But we welcome back Peter as CEO to build upon the foundations that have been laid and lead Stellar Capital into its next phase of development.”
Pettit said it was an opportune time to exit Stellar and to focus on other business interests. “I have been involved with Torre and Stellar for a long time and I feel I need a break. I’m not stepping away from business forever. I will be back, and there are other business opportunities that I might pursue after I’ve had some time out.”
Pettit’s resignation, however, did prompt speculation that the bigger shareholders in Stellar could push for the company to be broken up or restructured to extract value.
Stellar’s shares have traded at a deep discount to intrinsic net asset value for a long time and the share price fell more than 55% over the past 12 months. But on Wednesday, Stellar closed 4% higher at 78c.
Most market watchers canvassed on Wednesday recognised that Amecor and Prescient were attractive cash-generative assets but that sentiment for Stellar was weighed down by its investment in struggling Torre.
There has been talk that Stellar could unbundle its Torre stake to shareholders; or, should a suitable price be commanded, it could be sold to a larger industrial player such as Invicta, which is controlled by Wiese.
It is also possible that Stellar’s financial-services interests could be merged with the specialist financial-services interests of Wiese-controlled vehicles such as Tradehold or Alt-X-listed VestIN.