Bad times could be good for Reinet
But activist Botha rails against ‘related party’ issues
ALTHOUGH A COLLECTIVE GROAN went up when corporate activist Theo Botha began a lengthy interrogation of chairman Johann Rupert at last week’s Remgro meeting, shareholders got full value from the ensuing interaction. In fact, shareholders might be wondering if Botha inadvertently brings out the best in Rupert – who certainly went a long way to placate any jitters shareholders might have about Remgro and Richemont’s restructuring in the middle of a severe global financial crisis.
Other than Botha’s questions there wasn’t a single interjection or enquiry from the more than 100 shareholders assembled at the Erinvale Hotel in Somerset West. Botha’s line of questioning was certainly not appreciated by Remgro director Dillie Malherbe – who, perhaps unnecessarily, showed support for his chairman by suggesting Botha was talking nonsense.
But it was Botha’s enquiries about Reinet Investment Advisors – the company controlled by the Rupert family to manage soonto-be listed Reinet Investments – that ensured shareholders got their money’s worth at the meeting. Depository receipts in Reinet Investments will be unbundled to Remgro shareholders later this month as part of a restructuring process centring on the unbundling of Remgro and Richemont’s shares in British American Tobacco (BAT).
Reinet Investment Advisors will earn a 1% fee on the “invested assets” in Reinet Investments (which will initially comprise a 3% to 4% stake in BAT and other smaller investments) and a 10% performance fee on the cumulative returns earned for shareholders.
Botha’s inference was that Rupert would earn money without taking any risk through the Reinet Investment Advisors’ structure. He even questioned why the separate investment advisory company took the name “Reinet” when it was in fact an unrelated entity.
Rupert replied the Reinet tag was added to the investment advisory company because he was tired of naming companies after the Rupert family.
Botha told Finweek after the AGM that Reinet Investment Advisors could easily be mistaken for a subsidiary of Luxembourglisted Reinet Investments. “I don’t know why Reinet simply doesn’t employ people in the company and pay them from within the listed company. Why do we need a separate investment manager outside Reinet Investments?”
Coupled to the fee structures regarding Reinet, Botha also questioned the “forced” donation of 10% of Remgro shareholders’ BAT allocation to Reinet Investments. Botha contends Remgro shareholders should be given the choice of keeping all their BAT shares or donating 10% to participate in Reinet Investments.
Rupert stressed the injection of BAT shares into Reinet Investments would ensure the new investment vehicle was of sufficient size to attract the top talent in the investment management sector. The underlying message from Rupert was that Reinet Investments – which will publish its prospectus shortly – could be well positioned amid turmoil on global investment markets in terms of securing quality assets at good prices and attracting