Vunani moving back into property investment to diversify
Financial services group Vunani, headed by Ethan Dube, is re-entering property investment to further diversify its portfolio.
The company won a tender to build a mixed-use development property in Clifton, Cape Town, and is expecting to announce another property transaction soon.
The group had a property portfolio before, but sold it to Texton Property Fund in 2013 to deal with its rising debt. “Some of the guys that were in our property portfolio before we sold it are back with us now. We are aggressively looking,” said Dube.
The black-owned financial services group — with operations in asset management and administration, investment banking, stock broking, property and mining — increased revenue from operations 46% to R233.7m in the six months to August. About 42% of group earning now comes from private equity ventures after a 167% revenue growth in its mining operations.
“The mining sector is performing very well right now. But it’s only a balance sheet strategy for us. Without a strong balance sheet we can’t build our finance business to the scale we want to. So the private equity generates the cash we need to do more acquisitions in the financial portfolio,” said Dube.
Bullish on growth
Basic earnings per share surged 85% to 15.7c. Dube said the group was bullish that it would continue with its upward trajectory for the rest of the year, despite difficult market conditions.
“It’s partly a function of the relatively high coal prices. But our other private equity investments are also doing well. We received dividends of R8.3m this year compared to R0.8m last year,” said Dube.
Though the financial services remain the biggest part of Vunani’s operations, the mining portfolio generated R93.8m in revenue and contributed the biggest share of the group’s profit at R13.7m. Vunani has a joint venture with Anglo in which it processes coal mine dumps and has received good returns from it in the past two years. It has entered into a bigger joint venture with Anglo and will start mining in a new mine in November.
Dube said that in the longer term the asset management and administration business would become much bigger than the rest. The unit’s profits were suppressed by servicing costs at the moment but that was expected to change in the next two years, he said.
In its asset administration unit, the company had added three products in its platform. It previously administered only beneficiary fund assets, now standing at R6.5bn. In the asset-management space, it was looking to add products to serve private clients and wealth-management clients.
“If we find businesses that offer what we don’t have on our platform at the moment, we will look at acquiring them,” said Dube.