Stellar Capital Partners, the newly constituted Cape Town-based investment company aligned to retail tycoon Christo Wiese, is already making waves. In recent weeks Stellar has triggered a handful of transactions aimed at shaping the business into a vibrant investment vehicle. The spark appears to have been provided by Stellar accepting an offer to buy its 20% stake in vehicle tracking and fleet management firm Digicore. Digicore is being wooed by an American rival Novatel Wireless, and when the mooted takeover deal goes through Stellar will receive proceeds of around R200m.
The prospect of having additional capital on the balance sheet has probably prompted Stellar to execute on two key acquisitions. The first involves buying the minority shareholders in struggling asset management and financing firm Cadiz, which is based in Claremont. Stellar will use its shares as settlement, offering five new Stellar at price of 200c/share for every eight shares held in Cadiz. The chances of Stellar successfully snagging Cadiz – which has an asset management business with R30bn under management – have been greatly enhanced by the company’s shares price trading at around 275c/share.
Stellar already owns around 17% of Cadiz, and has received support from shareholders representing nearly half Cadiz’s issued shares. Stellar directors contend Stellar – which will be delisted from the JSE - would benefit from the “focus and flexibility” of operating in the unlisted environment. They argued that support from Stellar would help Cadiz’s future corporate activity as well as enhance its ability to respond swiftly and decisively to market opportunities. Stellar added that there would also be a consolidation of head office functions and costs as well as greater clarity and flexibility in the turnaround effort with a strong anchor shareholder driving the process.
So far investors seem to like the Stellar approach with Cadiz’s market value moving from R287m at the time of the offer proposal to nearly R400m at the time of going to press.
Stellar’s second significant transaction has seen the company snagging an influential 3,46% stake in fast growing Cape Town-based industrial services and products company Torre. Torre is an industrial group that is well known to readers after CBN detailed some of its shrewd investments over the last three years. The company currently holds an array of specialised industrial assets like Tractor & Grader Supplies, Retreat-based automotive group Control Instruments and Set Points Technologies.
Torre services the automotive, mining, construction, manufacturing and agricultural sectors in South Africa and 11 African countries. Its endeavours have paid off handsomely with the December 2014 interim results showing a 118% increase in headline earnings.
While the Cadiz and Torre investments will form beach-heads for Stellar’s financial and industrial hub, the big question now is what plans are afoot to build on its technology pillar. The company also holds control of Retreat-based electronics manufacturer Tellumat – a business that could conceivably be scaled up with selected acquisitions.
Watch this space...