Labat is likely to shed subsidiaries

Investment group Labat Africa, which has announced it is venturing into the cannabis market, is likely to unbundle some of its subsidiaries to unlock value for shareholders.

Investment group Labat Africa, which has announced it is venturing into the cannabis market, is likely to unbundle some of its subsidiaries to unlock value for shareholders.

In recent months, Labat bought two entities, gas company Autogas and vehicle videotracking business Real Chem, to expand its energy and logistics businesses respectively.

“We are in negotiations with other fuel distributors. We are working on one specific one that we haven’t concluded yet,” CEO Brian van Rooyen said.

Labat said its venture into the lucrative cannabis market may result in the separate listing of some of its subsidiaries.

“Whoever is in Labat now will be smiling to the bank because they will have their shareholding in the cannabis business and retain their shareholding in the Labat business. When we unbundle that either into a separate listing or a publicly unlisted company, they will have value in both of the entities of Labat,” said Van Rooyen.

Last week Labat unveiled plans to establish an integrated cannabis business and aims to “occupy and service the entire value chain of the cannabis market”. It acquired a 70% stake in a Lesotho cannabis grower and manufacturer, Zarenka Group. The remaining 30% will remain under shareholders Luxolo Vava and Mohammed Osman.

It also bought shares in seeds and genetics business Knuckle Genetics and packaging firm Pac-Con, which manufactures and packages liquids, tablets, capsules, creams and gels.

Pac-Con will be used to produce high-grade CBD (cannabidiol) oils and related cannabis products for retail and wholesale markets, Labat said.