Remgro CEO keen to expand its unlisted portfolio
CAPE TOWN — Investment conglomerate Remgro has reiterated its commitment to building up the unlisted portion of its R105bn investment portfolio after prompting from analysts at a presentation last week.
About 70% of Remgro’s investments are listed counters, including sizeable holdings in private hospital group Mediclinic International, banking group FirstRand, insurance hub RMI, food brands company RCL Foods, liquor group Distell and a recently acquired stake in shipping and logistics firm Grindrod. The issue raised by investors is that Remgro would be a far more attractive investment proposition if it served as the only access point to unlisted investments rather than having the bulk of its portfolio constituents available for direct investment on the JSE.
Remgro CEO Jannie Durand stressed future deal-making endeavours would lean towards unlisted ventures. But this was not always easy, he said, noting that the recent investment in unlisted Foodcorp effectively turned into a listed venture after the deal was executed through subsidiary RCL Foods.
Strong growth in Remgro’s listed investments recently, most notably Mediclinic, has also inadvertently skewed the listed:unlisted ratio.
Investec Securities analyst Thane Duff asked whether Remgro would not consider buying out minorities in some of the larger listed investments and delisting these counters.
Mr Durand conceded such proposals were looked at regularly by Remgro, noting that the company had in past years been thwarted in several efforts to buy out Rainbow Chickens (now RCL Foods).
But he ramped down expectations around increasing the quantum of unlisted investments via minority buyouts at listed investments. “Sometimes you end up paying too much for an asset, and it won’t make a return. Investors usually want top dollar for their stakes. But give me (an opportunity to buy) Grindrod or Distell at market price and I would look at it very seriously.”
Remgro’s unlisted portfolio includes some gems, most notably a 25.8% stake in consumer brands conglomerate Unilever, a stake worth close to R9bn. Other key unlisted investments include a 50% stake in gases group Air Products (worth R3.1bn), a 32.3% stake in empowerment group KTH (R2.4bn), a 31.6% stake in e.tv’s holding company Sabido (worth R2.3bn), and a R2.3bn investment in the CIV Group, owner of fibre-optic specialist Dark Fibre Africa.
Mr Durand was also asked about housekeeping efforts in disposing of smaller investments, specifically its sports brands investments — Premier Team Holdings in the UK and Marc Group in SA — as well as glass group PGSI. Mr Durand argued that perhaps these investments should be given more time.
He noted that Premier Team Holdings, which controls the Saracens rugby club, had just completed a new stadium. “Seven of the eight games hosted have been sellouts.”