Bear not betting
THE JUST-RELEASED annual report from Reinet Investments is a bit of a letdown. Certainly the flurry of small(ish) deals brought to the table during the latter part of its second half of the year to end-March 2011 (Jagersfontein, 36south, Renshaw Bay and Pension Corporation) might have set the stage for a few interesting post-balance sheet events.
Sadly, there wasn’t much post-balance sheet activity to report. But in that regard it’s probably fair to state chairman Johann Rupert (aka Rupert the Bear) repeated in the annual report his earlier advisory that “until we’re more certain we have decided we serve our shareholders best by not making ‘major bets’ on the future”.
Still, for those who have consistently argued Reinet is more than just a British American Tobacco (BAT) play, the refrain “you can bet on the Ruperts’ deal-making skills” starts to sound a little strained when tobacco still accounts for the bulk of net asset value. And doubly so when the chairman is walking off with rather large performance and management fees (try close on R1bn).
The only deal struck after its financial year-end was “an interesting opportunity” in China, in the form of a small interest acquired in Lashou, China’s biggest online group buying venture. If Lashou sounds vaguely familiar it might be because a few weeks ago Remgro – another investment conglomerate controlled by the Rupert family – disclosed an investment in the Chinese company.
Basically, Lashou pools the buying power of its members to offer substantial discounts at restaurants and shops throughout China – a Chinese Groupon, if you will. Reinet’s annual report notes encouragingly: “Reinet Fund’s ability to invest at an early round of financing offers an opportunity to participate in what may be significant upside potential for this business.”
Every little bit counts, and soon Reinet may have collected enough small investments of suitable intrigue to spark market enthusiasm for something other than the reassuring defensive qualities of 84m BAT shares. Hasenfuss holds shares in Reinet Investments.