Stake sale lifts RACP cash pile

Dis-Chem Pharmacy in Rosebank Mall, Johannesburg.

Picture: Financial Mail

According to interim results to end-September released on Monday, RACP banked net proceeds of R327m from the Dis-Chem transaction – more than double the R149m value accorded to the indirect stake in the retailer as at the end of the reporting period.

The indirect stake in Dis-Chem was held through a 50% stake in Fledge Holdings. RACP CEO Piet Viljoen said the sale of the shares was part of an agreement that Fledge had with DisChem regarding the listing of the company on the JSE.

As part of the process, Dis-Chem bought back its shares held in the Fledge structure in order to place these shares in the listing, Viljoen said.

"We had no influence at Fledge … we were just a third party investor."

Nevertheless, he said, RACP was delighted to exit the Fledge-Dis-Chem investment at a sizeable profit. The original cost of the investment is reflected as R30.5m.

The Dis-Chem transaction represented an increase in RACP’s net asset value (NAV) of 361c per share, Viljoen said.

The company’s NAV was estimated at R26.52 per share as at November 18.

Viljoen said that after the realisation of the Dis-Chem investment, available cash had increased to R372m. But R80m would be earmarked to increase RACP’s stake in alternative gaming group Gold Rush, which ranks as the company’s biggest investment to date.

This means cash available for investing tops R290m.

Asked whether there was a promising pipeline for new investments, Viljoen hinted that some cash could be earmarked for a number of existing investments that were contemplating acquisitions.

Aside from the large investment in Gold Rush, RACP also holds influential stakes in diamond miner Trans Hex (and unlisted associate West Coast Resources), mining services group Sentula, specialist retailer Safari & Outdoor, La Concorde Holdings (formerly KWV) and private education business College SA.

RACP recently sold the bulk of its stake in poultry company Sovereign Food Investments, and is also looking to exit small investments in JSE-listed boutique hotel player Gooderson and US-based property group American Homes.