Ruc­tions over RMH dis­count

Share­holder ac­tivist dis­misses ‘mar­ket tech­ni­cal­i­ties’ ar­gu­ment while CEO says is­sue will be taken se­ri­ously

Financial Mail - - MONEY&INVESTING - Marc Hasen­fuss hasen­

In­vest­ment be­he­moth Rem­gro’s role in deal­ing with a das­tardly dis­count in RMB Hold­ings (RMH) — its big­gest in­vest­ment — is com­ing un­der in­tense scru­tiny.

Rem­gro holds a 28.2% stake in RMH, which has as its main in­vest­ment a 34.1% stake in bank­ing group Firstrand.

It was clear from the Rem­gro in­vestor con­fer­ence call last Thurs­day that there are grow­ing frus­tra­tions with the RMH struc­ture.

RMH tech­ni­cally es­capes be­ing tagged a hold­ing com­pany with a sin­gle listed as­set be­cause of a smat­ter­ing of (dare we say “un­con­vinc­ing”) prop­erty in­vest­ments.

Some of these prop­erty as­sets have un­der­per­formed, and have been sub­ject to wor­ry­ing im­pair­ments.

It is es­ti­mated that RMH, which now at­tracts a wider dis­count on the Firstrand hold­ing, is “cost­ing” Rem­gro R5bn in trapped value.

Dur­ing the in­vestor con­fer­ence call, share­holder ac­tivist Nick Krige con­tended that RMH’S pre­vi­ous ar­gu­ment — that the wider dis­count on the Firstrand hold­ing was caused by mar­ket tech­ni­cal­i­ties — was in­cor­rect.

He be­lieved that the ar­gu­ment around mar­ket tech­ni­cal­i­ties, ar­tic­u­lated in a Sens an­nounce­ment by RMH ear­lier this year, was mis­lead­ing, and needed to be rec­ti­fied in or­der not to mis­in­form in­vestors.

Krige also reck­oned that Rem­gro — as RMH’S largest share­holder — had con­doned the prop­erty strat­egy.

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