Will new-look company covet more media assets?
WILL INVESTMENT GIANT Remgro – after its proposed “merger” with corporate cousin VenFin – have ambitions to grow its influence in the media sector? The proposed merger of Remgro and VenFin largely brings together old economy investments (food, liquor, banking, mining, etc) with new technology assets (information technology, media and telecommunications).
There’s hardly any overlap in the respective portfolios of Remgro and VenFin, except in the area of media, where both companies hold fairly substantial investments. VenFin holds a major stake in Sabido, which is the controlling shareholder of free-to-air television broadcaster e.tv.
Remgro holds a major stake in Kagiso Trust Investments, which in turn controls radio and publishing group Kagiso Media. That means Remgro will have significant influence in the electronic media segment, holding two highly regarded assets that have traditionally been strong cash spinners.
Presumably Remgro’s media ambitions will be restricted to the “sexier” electronic media and that forays into print and
publishing will be most unlikely. Perhaps significantly, Remgro’s small stake in Caxton (a throwback to the days of Perskor) no longer features in the group’s list of investments.
VenFin does bring Remgro a foothold in specialist media in the form of One Digital Media (ODM) – a network of digital media for retail in SA. ODM allows brand owners and retailers to display content via broadcast or narrowcast to multiple environments or single LCD screens.
ODM only started operations in February 2007 and to date VenFin has invested more than R50m into it to help it expand its footprint, which includes deals with convenience store giant Spar. No doubt ODM should benefit from the 2010 Soccer World Cup by placing LCD screens in taverns, restaurants and bars.
Interestingly, VenFin also owns Fynbos Media – a small empowerment company holding around 8m shares in the Phuthuma Nathi empowerment vehicles (which in turn holds equity stakes in Naspers-controlled MultiChoice Africa).
But it’s not only SA assets that VenFin brings to Remgro’s table. The group also holds a significant minority stake in Nasdaq-listed mobile advertising specialist Vision China Media (VCM). Currently, VCM doesn’t add up to much, with its value markedly lower at R174m in VenFin’s interim figures to end-December 2008 as the company’s price has dipped from a high of around $25 to the current $5,50/share.
However, VCM’s share price might belie the potential of the business, with its first quarter 2009 results showing a 100% jump in revenue to $27,3m. Gross profit in the first quarter was a solid $13,3m – up more than 80% from $7,2m in first quarter 2008.
Collectively, the combined media assets will be worth less than R2bn, which – measured against Remgro’s sprawling portfolio – is fairly minuscule. But if the Remgro/ VenFin merger gets the thumbs-up from shareholders it will be interesting to see how Remgro reorganises its investments – which currently are housed under “Industrial”, “Financial”, “Mining” and “Other” (comprising the 21% stake in Business Partners and 44% stake in Xiacom).
Will new-look Remgro simply bracket most of VenFin under a new investment heading such as “Technology”? If a specific “Media” division is created in Remgro, then it may signal some serious intent to build a new medium…
Penchant for media assets? Johann Rupert