Remgro's CEO highlights challenges with key investments

REMGRO believes its three biggest non-performing unlisted investments, CVIH, Hirslanden and Heineken South Africa are largely to blame for the continuing discount to intrinsic net asset value that the investment group trades at on the JSE, CEO Jannie Durand said Monday.

- EDWARD WEST

Speaking in a presentation to capital market investors, Durand said these three investments, which comprise 20% of Remgro’s total portfolio by value and contributed no earnings or dividends to Remgro in the last financial year, would be turned around.

CIVH, or Community Investment Ventures Holdings focuses on building and managing fibre-optic networks through its subsidiaries, such as Dark Fibre Africa and Vumatel. Hirslanden operates hospitals, clinics, and specialised medical institutes in Switzerland. Heineken Beverages, part of the global Heineken company, produces beer, cider, and other drinks in South Africa.

Durand mentioned that the high gearing of all three businesses means that sound operational performance did not always translate into growth at the earnings or dividend level.

He said there had been some market commentary suggesting that Remgro overvalues its assets, which has led to the “stubbornly high” discount to intrinsic net asset value. However, companies like CICH and Heineken have been valued relatively lower compared with their average peer group valuations, he said.