Zeder hangs tough

Buy­out and Curro un­bundling is log­i­cal

Finweek English Edition - - COMPANIES & MARKETS -

FINWEEK READ­ERS prob­a­bly won’t be too sur­prised that PSG’s “pre­ferred in­vest­ment ve­hi­cle” – Pal­adin Cap­i­tal – is be­ing delisted af­ter just more than two years on the JSE. Last month we de­bated the pos­si­bil­ity of Pal­adin be­ing rein­cor­po­rated into PSG (“Delist­ing or just a clean-up?” 30 June) af­ter in­ter­pret­ing de­vel­op­ments and ut­ter­ances at PSG’s an­nual gen­eral jam­boree.

While some might con­sider it a mon­u­men­tal waste of time and re­sources to sep­a­rately list and then delist Pal­adin, peo­ple must recog­nise the na­ture of pri­vate equity. Oc­ca­sion­ally there’s a game-changer. And in Pal­adin’s case the in­vest­ment in Curro Hold­ings – the re­cently listed pri­vate ed­u­ca­tion ven­ture – was just such a game-changer. As things stand at Pal­adin, two in­vest­ments – the high-fly­ing Curro and un­listed em­pow­er­ment ve­hi­cle Them­beka – com­prise close to three-quar­ters of its un­der­ly­ing value. As PSG and Pal­adin CEO Piet Mou­ton pointed out at the AGM, even if some of the smaller in­vest­ments (num­ber­ing around 10) dou­bled or tripled in size there wouldn’t be a ma­te­rial ef­fect on value.

The pro­posal to un­bun­dle Curro is per­fectly log­i­cal, leav­ing the deep-pock­eted (or re­source­ful) PSG the dom­i­nant share­holder in a fast-grow­ing busi­ness that may well re­quire fur­ther cap­i­tal in­jec­tions in years to come. In fact, PSG’s struc­ture looks far neater hav­ing main­stay in­vest­ments in Capitec Bank, PSG Kon­sult (a can­di­date, we’re sure, for a sep­a­rate list­ing in bet­ter mar­ket con­di­tions), Curro and agribusi­ness in­vestor Zeder. It also re­moves the rather point­less ar­range­ment where Pal­adin was pay­ing man­age­ment fees to PSG, its big­gest share­holder by far.

But what hap­pens to Pal­adin once it’s folded un­der the wing of PSG? There’s


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