Ructions over RMH discount
Shareholder activist dismisses ‘market technicalities’ argument while CEO says issue will be taken seriously
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.