Tongaat easier target for PIC than Steinhoff
As one of Steinhoff’s largest shareholders and with access to the necessary funds for a potentially long-drawn out legal battle, the Public Investment Corporation (PIC) is well-placed to challenge the claims of confidentiality that keep the Steinhoff report under lock and key.
But perhaps SA’s singlelargest equity investor should first consider setting a precedent with an easier target, Tongaat. As one of the largest shareholders in this oncemighty sugar producer, the PIC would be the perfect party to challenge similar claims of confidentiality being made by the Tongaat board.
While there is a risk that early release of highly sensitive information may assist the alleged perpetrators, the broadbrush manner in which the boards of both Steinhoff and Tongaat have claimed confidentiality needs to be challenged before it becomes accepted practice.
The idea that a 3,000-page report (with 4,000 pages of annexures) could reasonably be reduced to an 11-page summary is an insult to the many victims of the Steinhoff collapse. At the very least independent arbitrators could be used to determine how much of the report could be released and how much redacted without risking the success of future legal actions.
The confidentiality claim around the enormously expensive Steinhoff report has set up a steel wall behind which many guilty parties are able to shelter in quiet comfort.
Knocking down that wall would be the big prize, but for precedent-setting purposes, the PIC should first look to Tongaat. It is an African largely South African story and would not face the same complexity.
If all else fails, the PIC could call an extraordinary shareholders’ meeting and remove the board, putting in place directors who might be more sensitive to calls that justice be seen to be done.
Financier Mettle, spun out of Christo Wiese-controlled Tradehold property listing in 2018, sans fanfare, continues to tap a promising UK niche. In the six months to end-August, Mettle’s 90%-owned Reward specialist secured-lending business based largely in Manchester and Leeds increased its loan book and invoice discounting book from R1.2bn (£63m) at end-February to R1.3bn (more than £67.4m).
Reward targets small and medium-sized UK enterprises with loans from £50,000 to £2m, SMEs not adequately serviced by traditional UK banks.
Tradehold backed Reward from launch as a start-up in 2010. Progress was cautious, but the business is now achieving scale. In the interim period, Reward had revenue of R122m and a R23m bottom line profit.
The future looks intriguing, with Reward lifting its senior funding facility to £60m. About £20m was unused at the close of the interim period; Mettle said the £40m balance was repayable in September 2023.
But things do not look as bright for Mettle’s SA businesses, hit by the R5m impairment of an investment in Lencor, an unsecured loan provider focused on home improvement. Changes to collection process in parts of this lending book hampered business, and reducing exposure to this segment hit profits. This is a pity. As a standalone, Reward might well pique the interest of discerning small-cap punters.