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OVER THE OCEAN – HCI EYEING AUSSIE OPPORTUNITIES

14 Oct HCI Australia

Opportunistic empowerment giant Hosken Consolidated Investments (HCI) is making its mark Down Under after emerging as the biggest shareholder in Australian Securities Exchange-listed Oceania Capital Partners.

HCI, whose SA investments range from gaming and media to transport and coal mining, has been reticent about its Aussie foray. In the latest annual report CEO Johnny Copelyn says: “We started a new investment subsidiary in Australia after the decision by three key former HCI employees to emigrate there.”

However, documents show HCI acquired 13,4m shares in Oceania for A$29,5m (R220m) from the Australian and New Zealand banking group .

The deal gives HCI a holding of almost 20%. But there appear to be moves afoot that could lead to HCI, which is renowned for its aggressive investment style, increasing its Oceania holding to 45%.

Talk is that HCI is looking to build a meaningful investment base in Australia by injecting new assets into the Oceania cash shell. Oceania holds around A$200m in cash after selling off its two biggest investments (iSoft and Signature Group) and retains a controlling stake in debt manager Baycorp as its sole investment.

Oceania is valued at A$245m or R1,9bn.

The possibility of HCI increasing its holding depends on how Oceania shareholders vote on two options. The first entails a pro rata return of the bulk of capital and no new investment activity; the second is a pro rata return of a smidgeon of the capital coupled to a share buy back that offers shareholders a chance to sell down their existing investments.

The second option is supported by HCI, which will not sell any shares in the envisaged share buy back. HCI could, depending on the sell down by existing shareholders, end up with a maximum 45% stake in Oceania. Should the buy back option be exercised, the new-look Oceania would trade off a much smaller asset base, though there should be sufficient capital to pursue new investments.

HCI FD Kevin Govender says the company spent A$41m (R315m) on the Oceania investment. “We initially bought a small stake of around 5% and then made a bigger investment recently.” He confirms HCI will look to use the Oceania “shell” for deal-making in Australia.

Progress should be worth monitoring as two of the recently emigrated HCI executives are respected corporate movers and shakers Michael Jacobsohn and Brian Scheiner.