Stellar intrigue
Combination of youth in Charles Pettit and experience in Christo Wiese means pref share offer might signal big deal drive
roposals by recently formed investment house Stellar Capital Partners to raise R1bn in fresh capital made headlines last week.
And why not? Stellar is bound to capture the imagination of excitable retail investors, since serial risk taker and retail tycoon Christo Wiese ranks as an anchor investor. Then there’s the recent appointment of Charles Pettit (who made investors a fortune by morphing a left-for-dead SA French into a vibrant Torre Industries in just a few years) as CEO and the vastly experienced consumer industry expert Corrie Roodt as a nonexecutive director.
These appointments will reinforce ideas that Stellar is to become a deal-making machine. What’s more, the adventurous Anchor Capital — headed by well-known fund manager Peter Armitage — is down to underwrite part of the rights issue.
On paper, more critical investors might be perplexed at the fuss around Stellar, especially the fact that it trades at a substantial premium to its last stated net asset value of 200c/share. Investment companies traditionally offer discounts
Pto underlying portfolio values. Stellar’s premium price should be viewed against a portfolio that is largely composed of a 34,9% stake in JSE-listed Torre and significant interests in financial services (Cadiz and the smaller Praxis) and electronics manufacturing (Tellumat).
To me, neither Cadiz nor Tellumat looks particularly exciting in its current form (and I stress current form because Pettit has that Midas touch that can transform the most hopeless asset into a real contender). There is the Torre angle, but if this fast-growing industrial cog is Stellar’s “sexy bit”, why not just buy the share directly?
I agree that a combination of young gun Pettit and old fox Wiese is intriguing, but more conservative investors might have preferred to see more deals being banked before paying a premium price for Stellar.
After nearly three decades of writing about JSE listings I should know that there are occasions when investors need to back the jockey, not the nag. Still, I’ve always been one for perusing the form book, and I’m not sure I could bet on the premium priced odds offered on