Investment firm RAC in major restructuring

Investment company RECM & Calibre (RAC), headed by asset managers Piet Viljoen and Jan van Niekerk, looks set for a restructuring after making its long-awaited tilt at buying Astoria Investments on Friday.

RAC disclosed it had acquired another 60.3-million shares in Astoria for about R145m, pushing its interest in the company from 29.4% to a commanding 78.45%.

The shares were acquired mainly from Hampden Capital and Legae Peresec, which had both recently built minority stakes in Astoria, and various portfolios managed by 36ONE Asset Management.

RAC will now have to make a mandatory offer to all remaining Astoria shareholders at 240c a share.

Astoria, which previously traded at a sizeable discount to its underlying value, recently went into “wind-down” mode, liquidating most of its investment portfolio and returning the bulk of these proceeds to shareholders in a special dividend.

Offshore cash

At end-September Astoria estimated its net asset value (NAV) at $0.174c a share, equivalent to about 260c a share at Friday’s exchange rate.

The remaining value in Astoria is represented by offshore cash.

RAC executive director Van Niekerk said the deal means buying offshore cash at a discount and ensuring flexibility for future investment strategies.

RAC has previously hinted that it could use Astoria to house its smaller “deep value” investments, which include stakes in Trans Hex Group, Unicorn Capital Partners, Outdoor Investment Holdings, private education company ISA Carstens and Conduit Capital.

Officially, RAC noted broadly that with a larger shareholding, it will “be able to provide its capital allocation framework to the Astoria board of directors for implementation going forward”.

But Van Niekerk confirmed that using Astoria as the vehicle for future investment endeavours is under consideration.

That would mean RAC would house a single investment in the form of cash-spinning alternative gaming company Gold Rush, which specialises in electronic bingo, limited payout machines and sports betting.

Gold Rush is already the dominant investment in RAC. At end-September RAC valued its 58.8% interests in Gold Rush at more than R1.3bn, representing more than 70% of the total investment portfolio.

hasenfussm@fm.co.za