Does RAC have other investment plans?
For determined, deep-value investors, RECM and Calibre (RAC) are not exactly latching onto a huge discount in efforts to buy full control of Mauritian-domiciled investment counter Astoria.
Last week, RAC, largely anchored on fast-growing alternative gaming business Goldrush, paid R140m to snap up 60.3-million more Astoria shares from a few, large minority shareholders. That meant RAC now speaks for nearly 80% of Astoria’s issued shares, and must make a mandatory offer on the same terms to remaining shareholders. Should all minorities want out, RAC will have to fork out about R65m to settle the 240c/share mandatory offer.
On Tuesday, Astoria issued a financial statement for the nine months to end-September, confirming net asset value (NAV) at $0.17c a share, or a “local” NAV of about 250c a share.
RAC is, in effect, acquiring full control of Astoria at a discount to NAV of just 4%. While this stands in stark contrast to the 20%40% discounts applied these days to listed investment companies, it must be noted that Astoria’s NAV consists mostly of offshore cash and liquid shortterm investments.
Still, RAC has a reputation for scouring for value. The willingness to stump up for Astoria may suggest some inspired plans for restructuring the business.
Market talk is that smaller RAC investments such as stakes in soon-to-be-delisted diamond miner Trans Hex; specialist retailer Outdoor Investments; private education business Isa Carstens; and Unicorn Capital Partners could be ushered into Astoria. That is, quite frankly, not the most inspiring collection of assets. One might assume there are other investment plans on the cards.
MTN AND FNB
There can be nothing more seductive for marketing departments of SA companies than being able to associate their brands with a Springbok
victory in a rugby world cup. The name and the emblem are probably the unlikeliest of brands to survive the transition to democracy; even though it predated the rise of Afrikaner nationalism after the Second World War, it became indelibly linked to the apartheid regime.
But former president Nelson Mandela changed all that in his remarkable act of reconciliation at the Rugby World Cup final in 1995, opening the door to the brand’s transformation.
Siya Kolisi’s appointment as the team’s first black captain, and now its first player of colour to hoist the William Webb Ellis Cup, continued to advance the Springboks as one of the few sources of inspiration and solidarity for a painfully divided nation. For sponsors of the team, including notably mobile telecoms group MTN (headline sponsor) and banking group FNB, which both came on board in 2017, the millions spent so far must look like small change for the return on investment their brands will be able to deliver after the historic victory.
As well as the free publicity being generated by the Springboks’ return from Japan, the brands can leverage the exposure in a sustained advertising campaign, and will almost certainly contract Kolisi to endorse their products individually.
Attributes associated with the win include racial cohesion, exemplary conduct, persistence, determination, and excellence, all sheer marketing gold if you have the good luck to time your sponsorship just right.