Market is ready for an activist investment fund
THE EMERGENCE OF VALUE Capital Partners (VCP) as an influential shareholder at services conglomerate Adcorp heartens me greatly. Shareholder activism has largely been the domain of tireless individuals such as Theo Botha, who too often can’t back up valid shareholder concerns with voting muscle. Goodness knows, if Botha had had influence, sad sagas such as Sage might have turned out differently.
Adcorp, which was once rated as a top second-line share, has been in a tough space for a while, and shareholders will surely recognise that the intervention by VCP was probably not a moment too soon.
It’s not uncommon for shareholders to sit on their hands for far too long, remaining hopeful that an operational or strategic tangle will eventually be resolved sans corporate ructions. Distribution & Warehousing Network (Dawn) is a recent example where early intervention by major shareholders might have prevented some serious value destruction.
VCP, featuring Anthony Ball and Sam Sithole, is clearly more determined than diplomatic. It has already made its presence felt at technology giant Altron, and shareholders must be thrilled that since the new directional shareholders took charge the share price rose around 25%.
Adcorp’s share bounced back strongly after VCP’s involvement was confirmed. But considering the value that could be unlocked by reorganising Adcorp, I suspect there is plenty of upside to come in the next 18 months. Hopefully other activist shareholding firms will come to the fore because of VCP’s emergence and the chance for successful engagements at Altron and Adcorp. Or it may inspire individual shareholders to band together to form points of influence.
Over the years there have been whisperings about the launch of an activist investing fund in SA. Perhaps RECM & Calibre, the investment firm headed by Piet Viljoen and Jan van Niekerk, is the closest we can get to an activist fund with influential positions in long-time “dogs” such as Dawn, Sentula and the Trans Hex Group.
Certainly there is more than enough opportunity on the JSE for a dedicated activist fund to solicit serious market interest. Of course, gaining influence is easier said than done. Still, I wonder whether readers would flee from or flock to a portfolio managed by an energetic activist investor not cowed by the difficulties in unlocking value in neglected counters.
Let’s assume an investment entity could form a portfolio consisting of influential positions in (for instance) Interwaste, Argent Industrial, Sun International, Bowler Metcalf, Trencor, Hulamin, Pallinghurst Resources and Value Group. Or is it simply easier to stump up for positions in (the few) stocks with discernible growth prospects?