Investment company PSG Group said on Tuesday it had ambitious plans to make its newly acquired property company a premium retirement hotspot.
PSG bought a 50% stake in Evergreen, which is part of the Amdec Group, in September 2017. The retirement village investment recently secured four new properties to develop.
CEO Piet Mouton said PSG would get involved in the operational side of Evergreen. PSG plans to increase the number of units to 5,000 in the next five years. It currently has fewer than 1,000 units.
“We are not building properties to sell them off. We want to take charge of the operations as well. There is no national player when it comes to retirement homes. We want to build facilities that will give families peace of mind. I think there’s a fantastic opportunity to grow recurring income from that investment,” said Mouton.
Although PSG Alpha, the incubation division in which Evergreen falls, reported a 24% decline in recurring earnings per share due to further investments in start-up businesses, Mouton said the new investments had good prospects in the long run, even though earnings were likely to be volatile in the short term.
Through PSG Alpha, the PSG group invests in start-ups and watches them grow to major businesses, as it did with Capitec and private schools group Curro. Current investments in the Alpha business include Evergreen, private higher-education group Stadio, fast-moving consumer goods distributor CA Sales and renewable energies company Energy Partners.
PSG said that apart from PSG Alpha, all of its other subsidiaries and investments delivered commendable returns amid demanding economic conditions. “They all came through for us. You can’t only pin it to one investment. Obviously Capitec contributed the biggest share because it is bigger but it was double-digit growth all around,” said Mouton.
Capitec, which is PSG’s largest investment, recorded a 20% increase in headline earnings per share for the six months to June. Curro’s schools division, excluding Stadio, saw a 22% increase in earnings. The wealth and asset management unit, PSG Konsult, reported an 18% increase in recurring earnings per share, while Zeder, which has a stake in Pioneer Foods, reported a 158% jump in recurring earnings.
Contribution from these investments increased PSG’s recurring earnings per share by 22% to R5.03. Headline earnings per share rose 40% to R5.07, driven by both the increase in recurring earnings and a fair value gain on one of Capespan’s investments. The company declared an interim dividend of 152c , which was 10% higher than in the first half of 2017.
Mouton repeated PSG Konsult CEO Francois Gouws’s stance last week about the group's commitment to SA, saying that despite obvious challenges in the country the PSG Group remained positive.
“We will continue to invest and believe that the group’s investment portfolio is suitably positioned to continue yielding above-average returns,” Mouton said.