Remgro eyes food deals
• Investment company more optimistic — CEO
Remgro is considering food and infrastructure investments and will look at bolt-on acquisitions in these segments.
Remgro is considering food and infrastructure investments and will look at bolt-on acquisitions in these segments, CEO Jannie Durand says.
The investment holding company was looking for direct investments and investments “via our various platforms” in food and infrastructure, Durand said on Thursday.
Remgro’s interests in those sectors include stakes in RCL Foods, beverages company Distell, logistics firm Grindrod and various fibre-optics businesses.
Bloomberg reported last week that Remgro was in advanced talks to buy fibre network provider Vumatel and that it would combine the company with its Dark Fibre Africa business.
“We don’t comment on market rumours,” Durand said on Thursday. However, he said the wave of optimism that had spread across the country since the ANC’s elective conference in December 2017 had resulted in a more conducive investment environment.
“Hopefully that will spill over, not just for Remgro but for the rest of the economy,” he said.
“Hopefully other companies sitting on cash will invest [too], especially in things like infrastructure and education that are needed to grow GDP.
“We are more optimistic [in general] than we were six months ago,” Durand said.
On Thursday, Remgro said headline earnings in the six months to December fell 6.1% to R4.4bn.
However, excluding a fair value adjustment related to a bondholder exchange option, headline earnings were up 6.2% at R4.3bn.
This was mainly due to higher earnings from RCL Foods, Total and RMI Holdings and higher finance income, though this was offset by a lower contribution from private hospital group Mediclinic. That included an impairment of Mediclinic’s investment in Spire, with Remgro’s share of the write-down being about R171m.
Most of Remgro’s consumer products, industrial and infrastructure investments were “impacted by subdued macroeconomic conditions”, the group said.
Durand said certain investments, including RCL Foods and aluminium company Wispeco, “are still underperforming”.
Asked whether Remgro would exit fully valued or underperforming investments, he said “there is work to be done, but there is nothing on our radar screen to dispose of at the moment”.
Remgro’s intrinsic net asset value per share rose 5.7% to R265.84 at the end of the period. Since the group’s share price ended December at R236, the group’s discount to intrinsic net asset value narrowed over the six-month period, from 15.1% to 11.2%. Remgro declared an interim dividend per share of 204c, up 5.2%.
Durand said Remgro was not looking to invest in new sectors. “I would say the majority of investments will go through our current platforms, the reason being that I think we’ve covered the platforms that we want to play in, so we’re going to invest behind those.
“I don’t see any other areas outside what we already have that are very attractive to us,” the CEO said.
Remgro’s cash reserves at the holding company level rose slightly to R12.5bn, implying net debt of about R1.1bn.