As the corporate landscape of South Africa continues to adapt to life after COVID-19, with several highly influential companies shifting their focus and investments; as a result thereof—The PSG Group is now looking at relocating investments from Capitec to education giants, Curro.
The chart-topping investment holding company, PSG Group, which consists of underlying investments operating across a diverse range of industries, recently published its results on how the company was performing for the six months ended 31 August 2020. These include; financial services, banking, education and food, and related business, as well as early-stage investments in select growth sectors.
During the period under review, the group revealed, significant corporate action was undertaken. This included, PSG shareholders approving the unbundling of a sufficient 30,5m shares (or 26,4% of the 30,7% interest held in Capitec), Thereby opening up the hands of PSG shareholders.
According to the investment holding company, the unbundled Capitec shares at market value on such date represented R132,37 per PSG share. However, PSG retained the balance of 4,3% in Capitec for liquidity purposes and to bolster its balance sheet. Furthermore, PSG disposed of 1,7m shares (or 1,5%) in Capitec for R1,5bn cash.
Additionally, following the unbundling of Capitec shares on 31 August 2020, the group disposed of a further 0.2% interest in the bank for a cool, R212 million.
After reducing its stake in Capitec, PSG subscribed for more shares in Curro during a rights issue which came to an end in September.
In its report, PSG explained Curro reported a 9% increase in recurring headline earnings per share for its six months ended 30 June 2020.
During the period under review, PSG accounted for a fair value loss of R732m following a decline in Curro’s listed share price since 29 February 2020 and earned a dividend income of R23 million in respect of its investment in Curro.
Following the reporting date, the PSG Group dramatically increased its interest in Curro to an impressive 60%.
Piet Mouton, PSG CEO, proved his support of the education giants, Curro, especially when it came to underwriting a bulk of the R1.5 billion right offer that the school group required to minimise its debt while increasing its capital for possible acquisitions.
He explained there were substantial uncertainties in the market when the PSG Group launched the rights issue—including schools being closed. However, he elaborated this has given Curro the necessary power to potentially make large acquisitions, which would pay off for the group.
Despite the challenges faced during the pandemic, it seems immense faith is being put in Curro Holdings, with the independent schooling group showing significant growth despite the challenges brought up by the global pandemic.
Authors: Quinton Boucher and Calvin Swemmer
Edited: Calvin Swemmer