Dis-Chem sale pumps up RACP
• Disposal of indirect stake helps investment company increase net asset value 39%, leaving JSE’s annual return behind in the dust
Long-term investment company RECM and Calibre (RACP) — headed by well-known asset management personalities Piet Viljoen and Jan van Niekerk — easily outperformed the JSE in the year to March.
Long-term investment company RECM and Calibre (RACP) — headed by asset-management personalities Piet Viljoen and Jan van Niekerk — easily outsprinted the JSE in the year to March.
Results released on Wednesday showed RACP increased net asset value — the best gauge of performance of an investment company — a whopping 39% to R27.35 per share. Over the same period the JSE’s all share index managed a much more modest 2.5% total return. The largest component of the return stemmed from dividends triggered by the sale of RACP’s indirect stake in recently listed healthcare retailer Dis-Chem.
Viljoen said this partially reflected the way the company’s investment in Dis-Chem was structured — via Fledge Holdings, “as a result of which the proceeds from the sale of this investment of R324m was paid out as a dividend”.
During the year, RACP also sold off minority interests in boutique hotel group Gooderson, American Homes and Afrocentric Health for a small profit.
About R250m was spent on investments, most notably acquiring control of alternative gaming group Goldrush from the Hipkin family.
The result was that RACP’s investable cash increased to R171m at year end — well up on the R3m reported in the previous financial year.
RACP now controls 53.3% of Goldrush, which ranks as SA’s largest alternative gaming group. The investment accounts for 58.4% of RACP’s net asset value. At financial year end, Goldrush operated 14 electronic bingo terminal sites and had rolled out 1,614 limited payout machines of a total licensed opportunity of 4,085.
It operated 23 sports betting shops out of a potential opportunity of 36 licences.
Goldrush generated revenue of R816m with earnings before interest, tax, depreciation and amortisation at R229m.
Viljoen noted that Goldrush was set to buy the Boss Gaming Group in the Eastern Cape and KwaZulu-Natal. As Goldrush matured and improved the scale of its operations, the business had become more successful at acquiring licences and rolling out existing licences, he said.
RACP bolstered its presence in private education by investing another R28.5m in College SA, host of brands such as College SA, Tabaldi Online Accounting Classroom and IASeminars.
One near-term objective was to develop and obtain accreditation for more courses and programmes and to obtain even higher accreditation for College SA businesses, Viljoen said. “This might take a bit longer, but it is certainly a lot cheaper than buying them in the market.”
RACP saw attractive returns on capital invested in College SA as it grew scale, brands and reach, he said. “We therefore plan to reinvest all our cash flow from our existing business and some further capital into these high-return opportunities.”
The company reduced its minority interest in Sovereign Foods. Since financial year end RACP had sold its remaining shares, realising a profit of R29m, or 58c per share.
RACP has since become an anchor investor in sister company RECM’s recently launched “deep value” fund by injecting existing “undervalued” investments in listed engineering firm ELB and unlisted agribusiness KLK into the portfolio.