Africa-Press – South-Africa. Remgro, the Rupert family-controlled investment company, is unbundling its 25% interest in JSE-listed Grindrod to shareholders – in line with its strategy to move most of its portfolio to unlisted assets.
The decision to unbundle the stake, which is valued at just under R1.8bn, follows a host of recent transactions involving other listed companies Remgro is invested in, including the proposed sale of Distell to Dutch brewer Heineken, as well as its recent offer together with shipping group MSC to take Mediclinic private. Remgro holds a 31.7% interest in Distell and 44.6% of Mediclinic.
In a SENS announcement on Monday afternoon, Remgro said it had “embarked on a realignment of its investment portfolio to ensure that it remains relevant and continues to deliver sustainable value for Remgro shareholders”.
It also said that since 2011 its relationship with Grindrod had been “good” and had supported the company’s “strategy to unlock value for its shareholders by refocusing on its core freight services business”. Grindrod has shipping and freight logistics operations.
“Execution of this strategy during recent years has yielded the desired outcomes and financial results, with the market responding positively to the benefit of all Grindrod shareholders. On the back of this performance, Remgro believes it is now the optimum time to unbundle its Grindrod interest to the Remgro shareholders.”
All Weather Capital senior equity analyst Cobus Cilliers said the deal made sense in terms of Remgro’s stated objective of moving its investments more into unlisted assets.
Holding unlisted assets made listed investment holding companies more attractive as it offered investors exposure to investments they could not access in the ordinary course of business. As for holding interests in other listed counters, investors could access these directly without going through an investment holding company.
“If you just buy a company that owns listed assets that you could buy directly yourself, you would ask yourself what the rationale would be for that.”
Cilliers said Remgro’s plan is an “interesting transaction” and that another option would have been to sell Grindrod’s terminals business to a strategic international partner.
“This doesn’t stop this from occurring, but it just slightly moves in a different direction than we anticipated.”
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