Topping up investment
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,