Reward gives Tradehold a leg up
Volatility in UK creates opportunities as lenders are increasingly loath to grant loans to smaller businesses
Tradehold, the hybrid investment company controlled by retail tycoon Christo Wiese, experienced a strong performance from its UK-based financial services specialist Reward in the six months to the end of August.
Tradehold reported on Thursday that Reward, which specialises in asset-backed financing to small businesses in the UK, hiked turnover almost 20% to £4.4m. Reward’s net profit contribution increased 6% to £2m with the loan book growing 13%, to £43.7m.
Wiese, chairman of Tradehold, noted that since its launch in 2011, Reward had shown consistent profitable growth.
The continuing volatility in the UK business environment created substantial opportunities for Reward as banks and other mainstream lenders are increasingly loath to grant loans to smaller businesses, Wiese said. "Reward aggressively addresses this gap in the market," he said. The solid performance by Reward follows proposals by Tradehold, which is mainly underpinned by UK and South African properties, to split off and separately list its financial services assets.
Reward and South African-based financial services hub Mettle will be reverse-listed into the VestIN shell. Mettle performed stoutly in the interim period with a 4% increase in after-tax profits to about R7.5m.
The financial services division only represents about 6.5% of Tradehold’s total assets.
Wiese said the aim was to grow the stand-alone business strongly over time both organically and through acquisitions.
Turning to the sprawling property portfolio of Tradehold, Wiese said that the company planned to use the existing platform to unlock the full potential of individual properties.
Tradehold’s major property investment is in UK-based Moorgarth, which grew its portfolio value by about £3m to £177m. Turnover from the portfolio came in slightly lower at £13.7m after a legacy hotel asset was disposed of earlier in 2017. Wiese said that despite a growing lack of consumer disposable income in the UK, Moorgarth’s retail centres, which include Waverley Mall next to Edinburgh’s main railway station and the Market Place shopping centre in Bolton, performed well.
Tradehold’s South African properties, held under the Collins Group, lean heavily towards industrial properties that comprise about 91% of total gross lettable area. These include "big-box" distribution centres as well as major industrial complexes for tenants such as Unilever, Sasol, Massmart, Nampak and Pep.
Wiese said Tradehold believed it had identified a gap in the market for smaller convenience centres near transport hubs such as taxi ranks and train stations. Collins had acquired three such locations for development and had entered into 12-year leases with Shoprite and Cambridge, he said.
Collins had developed a pipeline of similar retail developments in seven regions of the country.