| Thursday 09 December 2021 Good morning Voornaam,
The competitive tension around Royal Bafokeng Platinum (RBP) continues, with Impala Platinum having acquired another 0.33% in the company. This takes its stake to 32.26%. As a reminder, the Northam Platinum stake in RBP is now 34.95%. RBP's share price closed yesterday at R154, which reflects the offer from Implats to all RBP shareholders of R90 cash plus 0.3 Implats shares for each RBP share. As there is a share-based element to that offer, the effective offer price fluctuates as the Implats share price changes.
Rand Merchant Investment Holdings (RMI) has sold the 30% stake in Hastings Group that it owns on a 51-49 basis with OUTsurance. The buyer is Sampo plc, which holds the other 70% in Hastings. There are no conditions for the deal and it is expected on close on 8th December upon receipt of the sales price. The gross pr oceeds are around R14.6 billion, subject to GBP:ZAR fluctuations. This is a premium of 37% to the privatisation price and achieves an internal rate of return (IRR) for RMI's investment of 18.4% in ZAR terms and 12.5% in GBP terms. OUTsurance manages call centres for Hastings and that relationship will continue, thereby preserving around 650 jobs in South Africa.
As RMI is the majority shareholder in OUTsurance, the total proceeds to the group are R8.7 billion. This negates the need for a rights issue that was announced in September. After the proceeds are received, RMI will be debt free. This is a huge swing from the net debt position of R9.5 billion as at 30 June 2021. The share price increased by 8.9% on the day.
In a market update, Discovery Bank noted that it now has around 408,000 total clients with over 770,000 accounts. Around 27% of this base are new clients for Discovery. Total retail deposits are R8.6 billion and tot al credit issued is nearly R3.8 billion. Overall, the bank expects to break even by 2024. Discovery expects to achieve an internal rate of return (IRR) of 21% on a "limited growth" scenario from here and 27% at the current run-rate. An "accelerated growth" case is an IRR of 34%.
Trustco held a highly unusual meeting to run a series of non-binding advisory votes on matters ranging from accounting treatment to the future of its current listings. As many 4th year accounting students have also had to learn, IFRS accounting rules aren't a democracy. I'm genuinely not sure what the point was of voting on accounting treatment. Nonetheless, shareholders (unsurprisingly) voted for a more favourable accounting treatment and indicated to Trustco that it should seek a listing on an international exchange. Presumably this exchange should have a democratic accounting system to be more in line with Trustco's tastes.
Labat Africa has c ome onto the radar in a big way in the past week. With news of a capital commitment from a mysterious international investor, a listing in Germany and now an issue of shares for cash, the share price has rocketed over 60% since the start of December. Labat has shareholder approval to issue shares representing 15.3% of the company for cash, with 1.74% now issued at a price between 23.18 and 25.15 cents. The funds will be used to expand the cannabis business. We are still taking small numbers here - the latest capital raise is only around R1.6 million.
Safari Investments RSA and Heriot Properties have made a joint merger filing to the Competition Commission. Although Heriot only owns 32.51% of shares in issue, usual voter turnout at meetings means that the company would usually be able to exercise more than 50% of the votes. Heriot plans to continue increasing its shareholding in Safari, so the companies have elected to approach competition autho rities in South Africa and Namibia to seek merger approval. Namibia has already approved the filing and the South African authorities are expected to make a decision by mid-2022.
Today's feature articles are on Wescoal's bumper earnings, Sibanye's invention of the term "circular economy" (and the implementation of its investment in New Century Resources) and Sanlam's operational update for the ten months to Octobe r.
Finally, after the sad news of Allan Greenblo's passing on 11 November, the team at Today's Trustee took on the mighty challenge of putting together a tribute issue. Greenblo was a huge figure in the world of financial journalism and in the investment and pension fund industry. We used to regularly feature his content in InceConnect. The entire issue is free to read and can be accessed here.
Good luck in the markets today!
The Finance Ghost
|
|---|
|
|---|
Local and Offshore Market News |
|---|
|
|---|
| Disclaimer
Our content is intended to be used and must be used for informational purposes only. You must do your own analysis before executing any investments or strategic decisions, based on your own circumstances. We do not provide personalised recommendations or views as to whether an investment approach or corporate strategy is suited to the needs of a specific individual or entity. You should take independent financial advice from a suitably qualified individual who gives due regard to your personal circumstances.
Whilst every care is taken, we accept no responsibility or liability for any errors or omissions in any of our content.
The views, thoughts and opinions expressed in our content belong solely to the author or quoted individuals and/or entities, and not necessarily to the author's employer, organisation, committee or other group or individual, or any of our affiliates or brand partners. |
|---|
|
|---|
|
|
