Reinet net asset value dented by BAT share decline

INVESTMENT holding group Reinet Investments’ net asset value (NAV) for the quarter to end June declined by 6.4 percent to €4.52 billion (R70.42bn), dented by the decrease in the share price of British American Tobacco (BAT). Reinet holds 68 million shares in BAT, representing 2.96 percent of BAT’s issued share capital.

“The value of Reinet’s investment in BAT amounted to €2.09bn at the end of June, compared to €2.52bn to the end of March, which is about 46.2 percent of Reinet’s NAV,” the group said.

BAT’s shares have slid from R582.39 a share on the JSE at the beginning of the quarter to R530.26 yesterday.

BAT, with brands Dunhill, Lucky Strike, Kent and Pall Mall, in a firsthalf trading update last month, disappointed investors after it said that it expected global industry volumes to fall 3.5 percent against previous guidance for a 3 percent decline.

According to Bloomberg, Piper Jaffray analyst Michael Lavery in a note this month cut the tobacco firm to neutral from overweight.

He said: “BAT is likely to deliver decent top-line and margin momentum, but softer US expectations and competition in reduced-risk products means there is limited upside for the shares.”

Reinet also added that BAT shares fell from £31.94 (R553.93) at the end of March 2019 to £27.49 at the end of June on the London Stock Exchange, resulting in a decrease in value of €338m.

Reinet said in an operational update yesterday that the decline was offset by the dividends of €39m received from BAT during the quarter and increases in the estimated fair value of certain investments, including specialist UK insurer Pension Insurance Corporation Group, and the derivative asset associated with the loan financing.

Reinet’s investment in the Pension Insurance Corporation Group was at an estimated fair value of €1.55bn at the end of June, increasing from €1.48bn reported at the end of March.

Reinet has invested in Trilantic Capital Partners, and the group has a minority partner in the investment. The investment and related funds was carried at the estimated fair value of €224m at the end of the quarter, up from €216m compared to the end of March, Reinet said.

However, an amount of €4m was attributable to the minority partner.

During the quarter Reinet’s cash and liquid funds increased from €360m to €373m.

The group also bought back its shares for €29m in its share buyback programme during the quarter.

Reinet’s share closed 1.37 percent higher at R244.70 on the JSE yesterday.