Allan Gray confirms it is the shareholder in Group Five that has asked for the company’s board to be reconstituted. The fund manager says clients hold 25% of the JSE-listed construction and engineering group.

This comes after Group Five said in a cautionary notice on Thursday it had been notified by a shareholder "that it seeks to call an extraordinary general meeting, to reconstitute the board following a disagreement on the future direction of the company".

Andrew Lapping, a director of Allan Gray, said: "We have lost faith in the board and think the company needs a fresh start — with a reconstituted board.

"We became very concerned over the past few months, because of various changes. A lot of people have suddenly left the company — executives and directors."

Subsequently, he had met all board members, "bar one and couldn’t get a clear understanding of the situation".

He said Allan Gray did not want to sell its shares in Group Five, as there was "substantial value in the firm, no doubt".

Lapping also said the fund manager had put forward the names of five "totally independent" candidates for board  positions — who had the  "requisite skills". Group Five had acknowledged receipt of  these actions.

Group Five chairwoman Philisiwe Mthethwa, the CEO of the National Empowerment Fund and wife of Arts and Culture Minister Nathi Mthethwa, did not respond to queries on Thursday.

She is also the sister of new Deputy Finance Minister Sfiso Buthelezi, who is now chairman of the Public Investment Corporation, which holds 15.67% of Group Five shares.

Group Five had earlier told Business Day that it was not able to disclose which shareholder had sought to have the board reconstituted, but that it was a stakeholder who held more than 10% of the company. This was needed to launch the action.

Most recently, nonexecutive director and audit committee chairman Babalwa Ngonyama resigned, following on the heels of executive director and remuneration committee chairman Mark Thompson, group executive committee member and head of investments and concessions Jon Hillary and group executive committee member and group human resources director Jesse Doorasamy, among others.

The resignations came after Group Five executive committee member and head of developments Themba Mosai was appointed as interim group  CEO. This came a week after the company on February  22 said that former CEO Eric Vemer would be leaving the company.

Group Five’s core operating profit plunged from a R315m profit to a loss of R338m in the period, as its engineering and construction operations saw a core operating loss of R518m.

This was helped by recognition of the group’s contribution of R255m to a collective R1.5bn voluntary agreement with the government to rapidly advance transformation in construction.

"Group Five management has indicated to analysts at recent presentations and briefings that they would be restructuring the management team and the business and thus we are not unduly concerned at this stage, but wait to see what sort of impact the changes will have on its performance," said Dexter Mahachi, an analyst at Momentum SP Reid Securities.

Mahachi said that fund manager Coronation had recently bought PSG’s stake in Group Five, taking its shareholding to 14.49%.

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