Peregrine writes down investment in Java Capital as deals dry up
Financial services group Peregrine Holdings has written down the value of its investment in Java Capital by R100m
Financial services group Peregrine Holdings, which owns private-client wealth manager Citadel, has written down the value of its investment in Java Capital by R100m as the corporate advisory house grapples with a slowdown in deal-flows in SA.
Java Capital’s attributable earnings in the year to end-March fell 60% to R15m because of “significantly reduced deal-flow in both the general corporate finance arena as well as in equity capital markets during the year”, Peregrine said.
The group bought 50% of Java Capital in 2014 for R205m.
In writing down that investment, Peregrine cited weak conditions in the listed property sector and subdued activity in the equity market as a whole.
“Java Capital is exploring opportunities to expand its brand into different areas and is tailoring its cost base to take account of the current market environment,” it said.
Java Capital is a joint sponsor of Peregrine, alongside Deloitte. It also acts as a sponsor to JSE-listed landlords including Redefine Properties.
Peregrine said on Thursday it made a profit of R523m in the year to end-March, a 24% decrease from the previous year.
Total revenue from continuing operations fell 10% to R1.6bn, even though assets under management grew by a fifth to R124bn.
Ongoing segmental headline earnings per share declined 7% to 152.9c “due to the significant drop in performance fees earned in Stenham and Peregrine Capital as well as earnings from Java Capital”.
Hedge fund manager Peregrine Capital’s headline earnings nearly halved to R35m, from R68m.
Amid general outflows from hedge funds, Peregrine Capital’s asset base reduced to R6.8bn from R7.4bn.
But Peregrine said while performance fees fell, annuity earnings, which make up 92% of total ongoing earnings, increased 10% in rand terms.
Peregrine said it would pay a final cash dividend of 100c a share.
“These results have been achieved against a backdrop of challenging operating conditions locally, including a weak economy and subdued market sentiment, as well as muted returns on both local and international equity markets,” the group said.
“Despite these conditions, the continuing focus on growing annuity revenue streams is reaping rewards and will continue to be a major focus for the group going forward.”
Peregrine, led by CEO Rob Katz, has a market capitalisation of R4bn.