Tamela: Has PSG sparked an unbundling and delisting trend?

600 400 Tamela

Tamela Holdings is a Corporate Advisor and Sponsor business with extensive market experience…

It’s no secret that, traditionally, Investment Holding Companies (“Investment HoldCo’s”) trade at a discount to the value of their underlying portfolios. Naspers, amongst others, has been trying to solve this problem for the last several years, as Tencent accounts for a substantial portion of its market capitalisation, although there are still other sizable businesses within its portfolio.

Exxaro had a similar problem when it owned Tronox SIOC and its portfolio of coal assets, to the extent that analysts historically calculated Exxaro’s coal assets at an extremely low valuation and, in some instances, approximating zero (when compared to the listed assets). Exxaro was able to “unlock” value by disposing of its Tronox stake and distributing proceeds to shareholders, which resulted in substantially reducing the discount. RMI / RMH and Long4Life are other counters that have executed transactions in an attempt to unlock value. In the case of RMI / RMH, they both undertook an unbundling and in Long4Life a buy-out.

It’s no surprise then that PSG is considering adopting a similar approach, with the recent announcement of its intention to unbundle its portfolio to shareholders. Despite not disposing of the underlying assets like Exxaro did, PSG’s rationale is the same, which is to “unlock” value for shareholders. What is of interest in this circumstance, is that they have also opted to delist from the JSE after the unbundling. This is all subject to shareholder and other regulatory approvals. The delisting aims to put value in shareholders’ hands and grant the controlling shareholders more autonomy in an unlisted space. This begs the question: will this spark a trend for Investment HoldCo’s to unbundle and delist from the JSE?

How can we help?
Tamela Holdings is a Corporate Advisor and Sponsor business with extensive market experience. Tamela has the expertise to assist you in navigating corporate actions including transactions from cradle to grave. To the extent that you may be interested in exploring your strategic rationale for listing or delisting, Tamela will be at your service.

For more information contact Mathibe Hlapolosa on 072 329 5179 or mathibe@tamela.co.za.