PSG readies to increase stakes in its subsidiaries

PSG was set to increase stakes in three of its subsidiaries as part of its growth strategy, Jannie Mouton, the executive chairman, said last week.

Mouton said PSG would raise its shareholding in Zeder, an investment company focusing on food processing; Paladin, PSG’s preferred private equity investment company; and PSG Konsult, a network of professional financial planners, stockbrokers and short-term brokers.

PSG owns 41 percent of Zeder, 80 percent of Paladin and 73 percent of PSG Konsult.

“We are going to drive growth strategy in the group to ensure everybody is focused on achieving their own Olympic goals,” Mouton said. “We are also going to conduct share buy-backs.”

Mouton said the group would also continue to invest in companies that were not listed.

A Cape Town-based analyst, who did not want to be named, said the move to acquire companies during this time was not risky. “I think they want to consolidate in sectors where they have been active,” he said.

PSG has enough funding to help it successfully search for growth opportunities in the next three years. The group has raised R600 million in preference shares in the past year.

“We are going to issue additional perpetual preference shares this year,” Mouton said.

Growth will be organic at PSG Konsult, but Zeder’s growth will be acquisitive and the targets will be unlisted agri-businesses.

In the six months to August, PSG reported “a pleasing” 11 percent increase in recurring headline earnings a share to 81.8c. PSG had over time sensitised the market that recurring headline earnings was a more sustainable measure of the company’s performance, because headline earnings tended to be very volatile.

A stellar performance was delivered by its low-cost bank Capitec. Its earnings increased by 50 percent, contributing R62m to PSG’s earnings. The bank remained on a solid footing with R1.5 billion in own equity against R4.3bn of assets (excluding cash).

It said it was in a position to repay all retail call deposits on demand.

PSG Konsult delivered reasonable results, with its contribution to PSG’s headline earnings down 17 percent to R29m. Zeder’s recurring headline earnings fell on the back of poor performance by KWV, with a loss of R17.4m.

PSG’s shares closed 1.5 percent higher at R23.70 on Friday.

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PSG readies to increase stakes in its subsidiaries

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