ACQUISITIONS WITHIN PORTFOLIO
Stellar puts hold on big deal-making
Stellar Capital Partners, the investment company in which retail tycoon Christo Wiese is a shareholder of reference, looks set to enter a period of consolidation, with value accretive acquisitions only being contemplated within existing portfolio companies.
After the release of results to end-November on Thursday, Stellar CEO Charles Pettit said growth in net asset value would be driven by recent investments in financial services counter Prescient and security technology specialist Amalgamated Electronic Corporation.
Stellar also holds a majority share in JSE-listed industrial group Torre as well as asset manager Cadiz and a number of specialist lending entities.
Pettit cautioned against market expectations of big
deal-making, noting that the R1bn of fresh capital raised by Stellar had all been committed to new investments.
"We won’t walk away from deals, but transactions will be done in our existing investments. We want to post three or four sets of good results to show the market we can grow net asset value."
One potential transaction is another tilt at buying out minority shareholders in Torre. Pettit would not be drawn on speculation but conceded it would make sense for Stellar to hold only unlisted investments.
Torre’s share price has been battered in the past 18 months after the company laboured in a tough industrial market.
Pettit believed the operational performance of Torre would stabilise and then recover strongly in the years ahead.
Looking ahead, Pettit said Stellar intended adopting an active dividend policy, pointing out that the company’s big three investments — Torre, Prescient and Amalgamated Electronic Corporation — were all strongly cash generative.
"We’ll start talking seriously about dividends at the end of June, when we should be able to give guidance on a dividend policy for the future."
June is Stellar’s new financial year end.