AFTER investing well over R5bn in its most established key assets, Stellenbosch-based conglomerate Remgro could be looking further afield for new investments.
Specifically CBN believes Remgro might now be looking at tapping infrastructure opportunities in Southern Africa.
Recently Remgro’s major investment deals have included rights issues at consumer brands giant RCL Foods (R3,1bn) and private hospital group the Mediclinic’s rights issue (R2,2bn.) With those large transactions under its belt, Remgro might look at bulking up some of its smaller investment platforms. In this regard it’s worth noting other recent investments have included infrastructure type deals – most notably R500m into PRIF and another R157m into fibre optic cable specialist Dark Fibre Africa (DFA.)
Remgro is also an anchor investor in SEACOM, the undersea cable specialist. While SEACOM has just reached break-even, Remgro seems more than a little enamoured with DFA – increasing its stake in the business to over 50%. DFA chipped in a solid R25m to Remgro’s headline earnings in the year to end June with all important annuity revenue increasing 27% (and accounting for 64% of total revenue.) Remgro noted that DFA’s main operating challenge was the slower than anticipated site build by customers, but added that the current value of the fibre optic network was in excess of R4b from R3bn in 2012.
The PRIF deal is fascinating, and could be the vehicle to drive future infrastructure endeavours. PRIF is a fund focused on investments in infrastructure companies and projects across the African continent. PRIF already has an interest in the Export Trading Group (ETG) which owns and manages a vertically integrated agricultural infrastructure supply chain in sub-Saharan Africa (with operations in procurement, processing, warehousing, logistics, distribution and merchandising.)
Most recently Remgro gained further infrastructure exposure after its 25% owned associate Grindrod (whose shipping history sometimes masks a large infrastructure offering) buying a strategic stake in agri-services business Senwes as well as offering to buyout rail engineering specialist Racec Group.
There could well be more to come with Remgro’s infrastructure investments contributing less than R200m to the group’s earnings compared with traditional hubs like banking (over R2bn) and Food, Liquor & Homecare (over R1bn.)
Watch this space…
By Jenni McCann
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