Mettle – This entrepreneurial financial services company’s revenue-generating ability from niched activities is nothing short of astounding. Its interim earnings for the period to September 30 almost matched its earnings for the full year to March 1998 – quite an achievement in pretty volatile economic circumstances. Naturally Mettle’s listing, scheduled for August next year, will attract loads of institutional interest. The million-dollar question is whether BOE will dilute or even relinquish its almost 30 percent stake in the company. We hear that Christo Wiese, one of the executive triumvirate that holds the reins at BOE, will step down as chairman of Mettle in January and hand over to Johnny Copeland, an executive of HCI (which also holds 30 percent of Mettle). This executive reshuffling reflects Mettle’s closer working relationship with HCI, while underlining a perception that Mettle is regarded by BOE as a portfolio investment rather than a strategic one. Mettle executives are reluctant to speculate on BOE’s intentions, but gut feeling is that not too many tears will be shed if the two part ways. The formation of BOE Bank means that executives at Wale Street have plenty on their plate, and clutching on to a strategic or a portfolio stake in the notoriously independent and entrepreneurial Mettle (which has also signaled its banking ambitions) doesn’t make much sense. In addition, Mettle is not reliant on BOE for its business flows, and in fact will probably be competing for merchant banking business in the not too distant future. Clearly, there won’t be a shortage of takers for BOE’s stake, especially when Mettle’s year-end earnings are conservatively pitched at R25 million and the balance sheet flows with cash (probably topping R200 million by March 1999).

Source: Business Day