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THE RISING SUCCESS OF HCI ASSETS

22 Aug General

Hosken Consolidated Investments (HCI) is without doubt a trailblazer among trade union investment companies. Its portfolio of assets and returns are the stuff of envy not only among its peers in the trade union sector but in the broader black economic empowerment space.

HCI interests straddle gaming hotels and leisure, media and broadcasting, transport, energy, property and exhibitions, industrial, clothing and textiles, food and beverages, and services and technology sectors. The company has stakes in leading brands including hotels and gaming group Tsogo Sun and television channel etv, which grew profits 12% and 17% respectively.

HCI has reported that group headline earnings breached the R1bn mark for the first time ever in the financial year ended March 30. This confirms its status as the leading trade union investment company in addition to it being the only one listed on the Johannesburg Stock Exchange. South African Clothing Textiles Workers’ Union (Sactwu) stalwarts Marcel Golding and Johnny Copelyn have presided over the HCI impressive foray into the business arena. Golding and Copelyn have built a business empire which has repatriated billions of rands to its shareholders. In the process the two have become influential moguls.

The empire-building began back in 1997 after Golding and Copelyn quit as ANC members of parliament. Their starting point was to consolidate R481m worth of assets Sactwu investment arm and the Mineworkers Investment Corporation (MIC) into the HCI shell.

HCI is now estimated to be worth some R12bn – a long stretch from the second biggest trade union investment company, MIC. The net asset value of the MIC portfolio stands at R2.8bn.

Two weeks ago, HCI announced a reorganisation of its capital structure to unlock value for shareholders. It is putting some investments into new listed entity to be known Niveus Investments. Niveus would house investments in Vukani Gaming, HCI Bingo, HCI KWV and Formex. Shareholders would be given the election to tender one HCI share for 11951 Niveus shares

“By creating a focused investment entity with a diversified range of investments, the listing of Niveus Investments is intended to provide HCI shareholders with direct exposure to investments which offer an alternative risk and return profile,” HCI said in circular to shareholders. “Over the medium to long-term, Niveus will benefit from a separate listing in the form of focused management team as well as greater access to capital markets for specific investments.

“The investments which form part of Niveus have been overlooked by investors because of their size relative to larger and higher profile HCI investments.”

Estimates of HCI underlying value range between R110 and R120 per share. The stock was at R89.82 in intraday trade yesterday. It is this discount to underlying value that the restructuring seeks to partly resolve. Further, the continued whittling down of debt, which stands at R1.3bn, is expected to help. The debt pile HCI is sitting on has dropped drastically from the highs of R4.2bn two years ago.

HCI is one of the better run trade union investment entities, thanks to the invariable scrutiny that comes with being a publicly traded company. However, over the years it has had its fair share of opprobrium related to the alleged autocratic management style of Golding and Copelyn. MIC ditched its investment in HIC in 2000, allegedly in protest to how the company was run.

Questions have been raised about HCI’s true BEE credentials. But these have not stopped its march forward and it is now poised for even greater feats given the business savvy of its leaders and its strong balance sheet.

Source: The New Age – Gaongalelwe Tiro