Reshaping Johann Rupert’s Remgro

Investment holding company, Remgro, is undergoing widespread changes to reduce the discount the company trades at relative to its net asset value (NAV). 

The company currently trades at a 40% discount relative to its NAV. Remgro’s NAV per share was R223.86 at the end of 2022 while its share price was R133. 

Remgro CEO Jannie Durand told The Money Show how the company is reshaping to close the valuation gap. 

Durand said the company’s recent moves are for the “right strategic reasons” benefitting its investee companies while hopefully reducing its trading discount. 

• Remgro is selling Distell to Heineken to form a “world-class platform” in which Remgro will retain a share. 
• The delisting of Mediclinic will also be concluded soon after the combined offer from Remgro and MSC was accepted by shareholders. 
• Remgro sold a stake in Vumatel-owner CIVH to Vodacom, pending approval from the Competition Commission. 

Durand said he is “very excited” about the reshaping of Remgro, adding that additional moves are “close to closing”. 

No silver bullet

The 40% share price discount to NAV means that the companies that Remgro owns are worth more individually than collectively under the holding company.

This situation is not unique to Remgro – the company’s analysis shows that it is a “worldwide phenomenon”.

Durand admits that there is “no silver bullet” that will miraculously eliminate Remgro’s trading discount. However, the company is working to reduce the discount through numerous business dealings.

These business dealings, particularly the delisting of Mediclinic and the Distell-Heineken deal, make it attractive to investors, as the only way to have exposure to these companies will be to own Remgro shares. 

“All we can do is make sure that our companies perform, that they grow and that we invest money in the right places to create value for shareholders,” Durand said.

Hopefully, then, “the market can see that we are making the right decisions”, and the shares become attractive to investors, thus closing the valuation gap. 

Committed to the JSE

Despite Remgro trading at a significant discount, Durand dismissed a potential delisting of Remgro.

His comments followed PSG’s delisting last year after bemoaning “serious value destruction” from trading at a 30% discount. 

Durand said Remgro remains committed to being listed on the JSE as it is still growing its investee companies. “We think we add a lot of value to South Africa,” he said.

Investment holding companies have the potential to drive a lot of economic growth by providing capital to startups and establishing new businesses. 

Durand listed Remgro’s success in starting Mediclinic, CIVH, and Vodacom, saying that investment holding companies “clearly add a lot of value to the economy of South Africa”.