Stellar to consider options after hiving off industrial assets
The group is considering whether to focus on financial services or new sectors
Investment holding company Stellar Capital Partners is considering whether it should move into new sectors or focus purely on financial services after it hives off its industrial assets, said CEO Peter van Zyl.
The group is selling off its investments in industrial supplies company Torre and security specialist Amalgamated Electronic Corp (Amecor), and is looking at ways to offload its stake in technology company Tellumat.
The Torre deal, expected to close in March, will probably tilt Stellar Capital into a “slightly net cash” position, while other transactions will add surplus cash to the books from about May, Van Zyl said on Tuesday.
The company has been focusing on reducing its debts for some time. That includes R593m worth of preference share liabilities as of the end of December.
“Once we have settled our debts, we will do a strategic review of the whole business. Clearly we are in financial services, but that doesn’t mean we won’t review those strategies themselves,” Van Zyl said.
After exiting the industrial sector, Stellar Capital’s portfolio will consist of a stake in investment manager Prescient and in alternative financial services businesses such as Praxis.
Its stake in Prescient will reduce from 40% to 19.4% on completion of an empowerment deal.
“We’re hoping that post that, Prescient’s platform will be a strong one to attract assets,” van Zyl said.
The group’s other assets are comparatively smaller, but they have “a lot of opportunity to grow”.
“They’re at relatively exciting stages. We haven’t valued them particularly high because we still believe there’s some work to be done on them, but we see that if we get things right, those could create quite a lot of value for us over time.”
Van Zyl said the board was debating the company’s future focus.
“We’re an investment holding company that historically was broader than one particular sector — the question now is do we stick to our knitting or go wider.
“We understand financial services so we do have a flavour for that, and certainly opportunities are coming to us in that space, so it would be an obvious one to follow, but we won’t count out other opportunities.”
Stellar Capital said on Tuesday its net asset value per share was R1.20 at the end of December.
The stock gained 7.4% on the day to 73c, implying a 39% discount to its sum-of-the-parts valuation.
The company reported a net profit for the six months to end-December of R159.7m.