Johann Rupert’s ‘forgotten’ powerhouse is rocking

Billionaire Johann Rupert’s Reinet has grown its net asset value by 9% per year since March 2009, with its latest results showing a net asset value of R126.35 billion.

Rupert’s two other companies, Richemont and Remgro, are well-known as juggernauts in their respective fields, but Reinet is often overlooked.

The Rupert family’s wealth originates from Anton Rupert, who founded the tobacco company Voorbrand in the 1940s, later rebranded as Rembrandt in 1948. 

By the 1970s, Rembrandt quickly dominated South Africa’s cigarette market and diversified into industries like financial services, mining, and food. 

Anton’s eldest son, Johann Rupert, expanded the empire internationally, creating Compagnie Financière Richemont, a Swiss luxury goods giant owning brands like Cartier and Montblanc, with a market cap of R1.47 trillion.

In 1995, Rembrandt and Richemont merged their tobacco interests into Rothmans International, which later integrated with British American Tobacco. 

In 2008, Richemont’s non-luxury assets, including tobacco, were spun off into Reinet Investments. 

Today, Johann Rupert chairs Reinet, a securitisation vehicle listed on multiple stock exchanges. Reinet Fund, its subsidiary, holds its investments.

Reinet’s principal asset is Richemont’s former interest in British American Tobacco, which accounts for 24% of its net asset value.

Although Reinet does not enjoy the same high profile as Richemont and Remgro, it is a formidable company with a market cap of R85 billion.

The company’s latest interim results, released on Wednesday, showed that this company is a powerhouse in its own right.

Between 31 March 2024 and 30 September 2024, Reinet’s net asset value grew by 6.6% to €6.59 billion (R126.35 billion).

British American Tobacco contributed €1.58 billion (R30.24 billion) to this value, or 24%.

However, the biggest contributor was the UK-based Pension Insurance Corporation Group, which added €3.47 billion (R66.37 billion) or 52.6%.

Reinet said its impressive net asset growth in the past six months reflects a compound annual growth rate of 9% in euro terms since March 2009, including dividends paid.

The company’s net asset value per share currently stands at €36.25 (R693.48), up from €34.02 (R650.36) at the end of March this year.

In the six-month period, Reinet received substantial dividends from its largest investment, with the Pension Insurance Corporation contributing €235 million (R4.49 billion) and British American Tobacco paying €68 million (R1.3 billion).

“During the period, geopolitical uncertainty increased with global markets continuing to be impacted by the effects of the Ukraine crisis, turmoil in the Middle East and high interest rates and inflation,” Reinet said. 

“Whilst inflation and interest rates have started to fall, the extent and impact of ongoing worldwide factors remain uncertain.”

However, the company explained that it has no direct exposure to Russia, Ukraine, or the Middle East through its underlying investments or banking relationships.

Therefore, the company has not experienced any significant direct impacts from interest rate fluctuations or inflation. 

“Reinet has various banking relationships with highly rated institutions and a well-diversified approach to cash and liquidity management,” it said.

“Reinet continues to value its investments in line with the International Private Equity and Venture Capital Valuation guidelines and its approved valuation procedures and methodologies.”

Since its formation in 2008, Reinet has invested around €3.8 billion (R72.62 billion) in its current investments. 

While Reinet did not make any new investment in the interim period, its contribution to its existing investments continued and, as of 30 September 2024, Reinet committed to providing further funding of €412 million (R7.87 billion)