The market initially appeared to have adopted a wait-and-see approach to newly listed special acquisitions group RH Bophelo, with its share price remaining relatively flat since listing.
But the share price has perked up somewhat this month, gaining about 13% so far. Most of that gain came from one day’s trading.
Portfolio manager at Gryphon Asset Management Casparus Treurnicht said the company still had much to prove before its liquidity levels showed up on the counter.
"Since listing, there were also 20 days when no shares were exchanged," he said.
Equity analyst at Mvunonala Holdings Matthew Zunckel agreed, saying it was still early days for RH Bophelo as it had not concluded its first deal yet, with the only asset under its belt the cash raised on listing.
Shareholders will pay very close attention to the details of its first deal, which it is busy working on
The company, which listed initially as a special-purpose acquisition vehicle in mid-July, raised R500m that it said would be used for the acquisition of infrastructure assets.
Zunckel said it was a vote of confidence in the company’s strategy that it was able to raise the R500m capital it sought, but "shareholders will pay very close attention to the details of their first deal, which they are busy working on and will likely announce over the next six months or so".
The company plans on working with small and independent hospitals, mostly in peri-urban areas and not on prime properties, to offer affordable healthcare to South African citizens who are willing to pay for healthcare but cannot afford the mainstream private hospital prices.
According to CEO Quinton Zunga, at least 20% of the people using public-sector facilities would be willing and able to afford low-cost healthcare and alleviate the pressure on government resources.
Zunckel said because Bophelo’s strategy was to buy brownfields operations that were much cheaper on a per bed basis than listed players, they would need to make sure they did not overpay for assets.
If RH Bophelo could garner the support of medical aid schemes that would help in achieving the volume growth needed, he said.
"However, the strategy is a very long-term one.
"Management will have to conclude many deals before they have the scale necessary to achieve an adequate level of return for shareholders," Zunckel said.