Wiese seeks sparklers
Retail tycoon and serial risktaker Christo Wiese looks set for another shot at glittering returns in the diamond sector.
This week two entities aligned to Wiese — Cream Magenta 140 and Metcap 14 — announced the acquisition of close to 50m shares in Trans Hex, which equates to a dominant stake of just over 47%.
It seems likely Wiese, who already held a small stake in Trans Hex, acquired the 50m shares from Business Ventures No 1952 (which acquired a 20.3% stake in Trans Hex in May) and Quinton George’s M-Cubed Holdings (which acquired a 26.18% stake in March).
Interestingly, Wiese’s son-inlaw, Marco Wentzel, was appointed to the Trans Hex board as a nonexecutive director shortly after the M-Cubed transaction.
Though best known as a retail and consumer sector investor (via Shoprite, Pepkor and Steinhoff International), Wiese enjoyed huge success in diamond mining in the late 1990s through an investment in marine gem hunter Ocean Diamond Mining Holdings (ODM).
In a strange twist of fate, Wiese famously snatched the highly productive ODM away from the then Remgro-controlled Trans Hex, which was looking to build capacity in marine diamonds. Wiese subsequently sold ODM to Namibian-based diamond miner Namco at a hefty profit. Trans Hex later acquired Benguela Concessions, a marine diamond miner that did not enjoy nearly as much success as ODM.
Wiese could not be reached for comment at the time of going to press. But a Sens announcement confirms Wiese has formed a consortium with Trans Hex’s other major shareholder, investment company RECM & Calibre, to make a mandatory offer to minority shareholders.
Wiese and RECM & Calibre will speak for around 72% of Trans Hex’s shares. RECM & Calibre also holds a 27.2% stake in West Coast Resources, an unlisted mining group where Trans Hex is a 40% shareholder.
Sources believe it would make sense to delist Trans Hex, which aside from being a fairly illiquid share also suffers from the poor sentiment reserved for smaller diamond counters on the JSE in recent years.
To date no details have been issued around a possible pitch price for the mandatory offer. Trans Hex is regarded as a “deep value” share. The company’s last stated net asset value (as at end March this year) was 506c/share — of which around 336c/share comprised the cash holdings.
On paper, Wiese seems to be buying smart — noting that Trans Hex’s share price is largely underpinned by its cash holdings. But Trans Hex does have operational challenges. Its traditional alluvial mining operations at Baken and Bloedrif are run down and it has yet to bring to full production its new operations under West Coast Resources. In Trans Hex’s latest annual report, CEO Llewellyn Delport said initial results of the production build-up at West Coast Resources were promising, but cautioned that hard work still lay ahead.