Top­ping up in­vest­ment

Finweek English Edition - - FRONT PAGE -

THE CLOS­ING OF the dis­count be­tween Rem­gro’s un­der­ly­ing value and its share price usu­ally starts tongues wag­ging about cor­po­rate ac­tion. Of course, if in­vestors had R100 for ev­ery time some en­thu­si­as­tic mar­ket wag sug­gested “the nar­rower dis­count means things are afoot at Rem­gro” we’d all be rather more af­flu­ent.

Per­haps this time the dis­count does re­quire in­vestors to pay a bit more at­ten­tion to de­vel­op­ments at Rem­gro. And it’s not as if there was no ev­i­dence things are get­ting a lit­tle shaken up at the Stel­len­bosch-based in­vest­ment con­glom­er­ate. In the year to end-March 2010 there was a def­i­nite ef­fort to tidy up Rem­gro’s port­fo­lio, with pro­pos­als to un­bun­dle its stake in high risk/high re­ward di­a­mond miner Trans Hex and the clin­i­cal cut­ting away of the stake in fiz­zling technology group Xio­com.

Af­ter the ac­qui­si­tion of cor­po­rate cousin VenFin last year, it’s un­likely Rem­gro is go­ing to gun for a big deal. But Rem­gro’s lat­est an­nual re­port does show a flurry of post-bal­ance sheet trans­ac­tions that will dis­pel any no­tions it’s pas­sively go­ing about its busi­ness.

Prob­a­bly the most sig­nif­i­cant post-bal­ance sheet trans­ac­tion in terms of strat­egy (rather than size) saw Rem­gro ac­quir­ing an­other 5,6m shares in un­listed Capevin Hold­ings for R19m. Capevin holds a strate­gic stake in JSE-listed liquor com­pany Dis­tell as its only in­vest­ment. Rem­gro went to the trou­ble to buy the illiq­uid Capevin shares on the open (OTC) mar­ket and the ef­fort means the group’s in­di­rect in­ter­est in Dis­tell shifts to 33,4% (from 33,3% at end-March this year).

There’s ob­vi­ously a strong crav­ing for more of Dis­tell, which – with strong brands,

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