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COPELYN TAKES BET ON HCI’S AUSTRALIAN ASSET

29 Apr General

JOHNNY Copelyn, the former trade unionist turned prime mover at empowerment investment giant Hosken Consolidated Investments (HCI), is taking a R325m bet on Australia.

A transaction announced on Thursday proposes that Mr Copelyn — through corporate entity Rivetprops — swap a portion of his HCI shareholding for the company’s entire shareholding in HCI Australia, which in turn owns a 67.5% stake in Australian Stock Exchange-listed Oceania Capital Partners.

It seems HCI — which is effectively controlled by the investment arm of the Southern African Clothing and Textile Workers’ Union (Sactwu) — wants to focus exclusively on South African investments. The company’s shareholding in US-based alternative energy group Montauk was also recently unbundled to shareholders.

The proposed deal involves Mr Copelyn selling back a portion of his HCI shares to the company in a share buyback. The proceeds from the share buyback will be settled by HCI issuing its entire shareholding in HCI Australia to Mr Copelyn.

Oceania Capital is a small investment company with a market capitalisation of about R530m, and holds interests in broadcast, specialist media, financial services and security assets. Headed by former South Africans Michael Jacobsohn and Brian Scheiner, it holds a 5% stake in Australian Stock Exchange-listed Atcor Medical.

In the year to end-March 2015 Oceania Capital reported net profit after tax of close to A$3m (R33m). At the time directors noted A$2.4m had been earned in the second half as underlying investments grew.

The deal appeared to go largely unnoticed on Thursday, but after some canvassing of market sources, the general consensus was that Mr Copelyn was externalising a portion of his large investment in HCI.

Mr Copelyn could not be reached for comment. One market watcher, who asked not to be named, pointed out that it was probably a good time for Mr Copelyn to switch into Oceania Capital, which was trading at a significant discount to its net asset value. Its latest annual report shows a net asset value of A$2.35 per share as at the end of March last year compared with a market price of A$1.30.

In total Mr Copelyn is selling 5.24-million shares, which at the R105 per share repurchase price is worth more than R550m.

Another leg of the repurchase deal appears to be aimed at bolstering the empowerment credentials at HCI’s main investment in leisure giant Tsogo Sun.

Former HCI executive chairman, Marcel Golding, is also participating in the share repurchase exercise. Mr Golding is selling 6.5-million HCI shares for about R682m but will take part of his settlement in shares in Tsogo Sun. HCI is the controlling shareholder of Tsogo Sun.

Mr Golding is part of a consortium that has bought a strategic stake in Rex Trueform and its pyramid holding company African & Overseas Enterprises.

Sactwu will also sell 4-million HCI shares in the repurchase exercise, and then reinvest the R420m proceeds into Tsogo Sun shares.

Avior Capital Markets analyst De Wet Schutte said it made sense for HCI to focus on its core South African operations.

Source: BDLive – Marc Hasenfuss