Zeder hangs tough
Buyout and Curro unbundling is logical
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