Control, diversification, and continuous development of assets were central to Johann Rupert’s transformation of the Rembrandt Group into a global empire of three companies with a value of over R1.5 trillion.
Johann Rupert is one of South Africa’s most successful and best-known businessmen with investments in many top South African and international companies.
He is the second richest person in Africa, with an estimated net worth of around $13 billion (R244 billion) according to Bloomberg’s Billionaire Index.
Johann is the eldest son of Anton Rupert, who established Voorbrand, a tobacco company, in the 1940s. Voorbrand was the forerunner of Rembrandt, which entered the South African cigarette and tobacco industry in 1948.
Rembrandt was a runaway success in South Africa, listing on the JSE less than a decade after being founded.
In the 1970s, Rembrandt expanded into other industries, like financial services, mining, engineering and food.
Soon after joining his father’s company, Johann spun off Rembrandt’s international assets to form Compagnie Financiere Richemont, a Swiss luxury goods holding company with brands like Cartier and Montblanc.
Rembrandt and Richemont consolidated their tobacco interests in Rothmans International In 1995. A few years later, it merged these interests with those of British American Tobacco.
Big changes were made in 2000 when Rembrandt was restructured into two publicly traded holding companies – Remgro and Venfin.
Remgro oversaw Rembrandt’s traditional assets, while Venfin acquired the technology-oriented assets.
In 2000, Rupert was appointed chairman and CEO of Richemont, and the company’s non-luxury-related activities were spun off into Reinet Investments in 2008.
Today, Rupert is the chairman of Remgro, Richemont and Reinet. The family owns a controlling stake in all three companies.
Richemont is the largest of the three companies, with a market capitalisation of R1.54 trillion. Reinet is second with a market cap of €3.76 billion (R91.8 billion), while Remgro is slightly smaller with a R82.5 billion market cap.
The three companies have shareholdings in various local and international companies that span numerous industries.
Head of research at Investec Wealth and Investments, Brian Kantor, told Classic Business that the structure of these holding companies is key to understanding how Johann Rupert has managed to maintain and grow the family’s wealth.
Kantor said it is important to note that Johann Rupert did not rest on his laurels and merely manage his father’s successful businesses.
Rather, he created a great company in Richemont. “Richemont is his work. His father created a great tobacco company, but Johann deserves great credit for building Richemont,” Kantor said.
Alongside this tremendous value creation at Richemont, Rupert maintained the family’s control of all their businesses and diversified their wealth across industries and geographies.
The immense wealth of the Rupert family is a testament to buying and holding productive assets, which is very unusual for wealthy families.
The Rupert family has provided the exemplar for the notion of family-owned businesses being extremely good stewards of capital.
Through their controlling stakes in the holding companies, the family has skin in the game. It means their wealth is on the line and ensures their interests are aligned completely with shareholders.
“If you are buying into these companies, you are buying into Rupert’s control,” Kantor said. “While Rupert does not get everything right, he also does not get everything wrong, and this structure serves the family very well.”
The crucial question facing the Ruperts is whether this wealth creation and maintenance can continue into the next generation. “That will be a very interesting question for the Ruperts,” said Kantor.
Anton Rupert, Johann Rupert’s son, serves on the board of all three of the family’s companies and is poised to take over stewardship from his father when the time comes.