PSG Group’s unbundling has been well received by shareholders, says its CEO
PSG GROUP’s Project Value Unlock to unbundle its investments had been well received by shareholders, and the restructuring remained on track to be concluded by the end of August this year, chief executive Piet Mouton said yesterday.
On March 1, the group announced a restructuring plan as a valueunlocking initiative for the benefit of its shareholders, following which PSG Group will be de-listed from the JSE.
In the meantime, yesterday, strong financial results were again reported for the year to February 28, with a 36 percent increase in PSG Group’s Sum-of-the-Parts (SOTP) value to R127.88 per share from R94.24. The SOTP value increase is the group’s key performance metric.
The share price fell 1.3 percent to R95.25 yesterday morning. Over a year, the price is up by more than 15 percent, but remains well below SOTP value.
“The significant discount at which PSG Group has been trading to its SOTP value in recent years has necessitated a strategic rethink to do what is best for PSG Group shareholders by unlocking such discount to the extent possible.
“For this reason, we are investigating restructuring the group, which if approved, should result in significant value being unlocked for shareholders,” Mouton said.
He said in a telephone interview they “truly believed” that their investments no longer needed the assistance of the PSG Group central function, that the companies were well managed, that each held good prospects, and that the companies would benefit from the increased liquidity in their shares, after the unbundling.
Investment holding company PSG Group’s investments operate across a range of industries, including financial services, education and food and related business, as well as early-stage investments. Mouton said they had so far received positive feedback from shareholders regarding the valueunlocking initiative.
The initiative entails unbundling the group’s shareholding in JSE-listed PSG Konsult, Curro, Kaap Agri, CA Sales Holdings (CA&S), as well as 25.1 percent of the total issued shares in higher education and distance learning company Stadio.
It also involves a repurchase of PSG Group shares from shareholders for R23 a share, cash.
The transaction would represent a 41 percent premium for shareholders, calculated on the share price of February 28, 2022, the day before the restructuring was first announced.
The results do not yet account for the proposed restructuring, as well as all the associated tax and restructuring costs.
Ninety-one percent of the SOTP investment value is calculated using exchange-listed share prices, while other investments are included at internal valuations.
No dividend was declared for the year, due to the restructuring and the fact that it would be part of the cash distribution.
PSG Konsult, a company focused on wealth management, asset management and insurance solutions, reported a 32 percent increase in recurring headline earnings per share following strong performance from its divisions.
Mouton said this company had shown its strength through the pandemic at a time when other financial services companies had all reported lower earnings.
Curro, the large private school education group, reported an 8 percent increase in recurring headline earnings per share for the year to end-December.
Mouton said Curro had been affected from low utilisation through two years of the pandemic, but cash flows were likely to resume strongly as schooling started to return to normal.
Zeder Investments, an investor in agribusiness, subsequent to its yearend of February 2022, unbundled its interest in Kaap Agri to shareholders, with the interest obtained by PSG Group to be distributed as part of the proposed PSG Group restructuring.
Zeder declared a special dividend of 92.5 cents a share following disposal of its investment in The Logistics Group.
Business incubator PSG Alpha had as it major investments shareholdings in Stadio, CA&S (FMCG distribution), Evergreen (developer and operator of retirement lifestyle villages), Optimi (education solutions to schools, tutors, parents and learners) and Energy Partners (manufacturer, owner and operator of energy assets).