Stellar reviews its business model
Investment firm will not sell assets despite net asset value falling 22%
Investment company Stellar Capital Partners, which trades at a hefty discount to net asset value, is reviewing its business model in a bid to recoup value for shareholders.
Investment company Stellar Capital Partners, which trades at a hefty discount to net asset value, is reviewing its business model in a bid to recoup value for shareholders.
Financial statements to endJune released on Thursday showed Stellar’s net asset value dropped 22% to 129c per share, mainly because of unrealised fair value losses in its investments in JSE-listed industrial supplies group Torre (R277m) and unlisted Tellumat (R61m).
Incoming CEO Peter van Zyl stressed there was no “for sale” sign hanging over all the company’s investments.
“We are embarking on a strategic review of all investments, the structure and ownership of these investments and our balance sheet structure. This won’t be done in five minutes, but we intend moving as fast as possible in getting relevant detail to the market.”
Speculation is rife that Stellar will sell its “industrial” investments — which include Torre, electronics manufacturer Tellumat and persistently profitable security technology business Amecor — to focus on its financial services segment.
This segment is anchored around asset management business Prescient but includes smaller asset manager Cadiz and other niche offerings.
In an investment review, Stellar confirmed the profit prowess of Amecor, disclosing normalised earnings before interest, tax, depreciation and amortisation growth of 12% to R53m in its financial year to end-March. Stellar said Amecor was positioned to continue its growth trajectory. The business was executing operational improvement plans including the appointment of a new chief operating officer.
Prescient performed steadily, with assets under management at the end of June sitting at R82.9bn (R74bn in 2016) and assets under administration increasing markedly to R223.7bn (R174.7bn).
Tellumat, however, continued to show a weaker profit trend. Stellar said heavy investment in research and development to improve offerings had detracted from its performance.
The company said Tellumat was well placed to capitalise on the possible resumption of the government’s set-top box digital television project.
Despite the significant challenges experienced by industrial businesses such as Torre (which reported results on Wednesday) and Tellumat, Stellar said it remained supportive of the management teams.
Stellar said Prescient and Amecor had improved the portfolio’s ability to weather the prevailing economic challenges.