- The PSG Group plans to unbundle its stakes in Curro and other companies.
- It will then buy all its shares from most shareholders and delist from the JSE.
- The company says the significant discounts in which investment holding companies trade mean listing is no longer attractive.
The Mouton family business, which was instrumental in establishing Capitec, Curro and Pioneer Foods, is delisting from the JSE.
The PSG Group has been weighing its options in terms of remaining listed on the JSE for a while now.
Among other things, the group's CEO Piet Mouton felt that there was too much red tape on South Africa's main bourse and that it was getting in the way of good dealmaking. He's also been scathing of the JSE compliance burden.
The other problem that PSG and other investment holding companies face is that their shares trade at a significant discount to their net asset values or sum of the parts. The average discount among these companies is more than 40%.
So, on Tuesday, PSG announced that it had finally decided to pull the plug. It is going to make PSG a private entity.
The company will unbundle its stakes in PSG Konsult, Curro, Kaap Agri, CA&S and 25.1% of Stadio. Most of these companies are listed separately on the JSE anyway.
After unbundling those businesses, PSG plans to repurchase all of its shares from shareholders, save for a few select individuals, including its management, its founders and their immediate families. It is offering R23 per share in cash.
Since the group's share price closed at R81.83 on Monday, the difference in what PSG is offering for its shares will come from the unbundling. In total, shareholders should end up getting R114 per share, representing a 38% premium to PSG's share price.
Only once shareholders approve the plans and the repurchase is complete will the group delist from the JSE.
"In all our engagements with shareholders over the past five years, a significant part of the conversations revolved around the discount at which we trade and what PSG Group can do to narrow such discount," said Mouton.
He said the group had tried to narrow this discount by unbundling its stake at Capitec, among other things. But despite that exercise, the group continued to trade at a 30% discount.
Mouton said investors seemed to prefer to invest directly in operational companies like Capitec and Curro - rather than having exposure through an investment holding entity.
"The simple fact is that the large investment holding company discounts negate one of the primary reasons to be listed, being one's ability to raise capital in the equity markets," said Mouton.
"It is the end of an era for this iconic investment business that was started by the legendary Jannie Mouton and me in November 1995," said one of PSG Group the founders, Chris Otto.
He said their goal was always to create value for shareholders and the continued discount situation inhibits that.
"I believe this is a bold move by current management but the right thing for shareholders," he added.
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