Bear not bet­ting

Finweek English Edition - - COMPANIES & MARKETS - MARC HASENFUSS jen­

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.

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