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VENTURES: A New Cape Powerhouse?

 



Recent Western Cape Business News

IS there another Stellenbosch business giant in the making following a recent deal that involved ‘moving and shaking’ by three local business heavyweights – Markus Jooste, Jannie Mouton and Christo Wiese.

For decades the Rupert family’s industrial and financial conglomerate Remgro has ruled the roost in the Western Cape from its base in Stellenbosch. But proposals by industrial giant Steinhoff International – which already holds control of Paarl-based industrial conglomerate KAP International – to acquire a 20% stake in Jannie Mouton’s PSG strongly suggests that a new investment powerhouse is being formed.

Jooste, the prime mover behind Steinhoff and (CBN understands) a recent addition to the Stellenbosch set, has over the years not been afraid to aggressively diversify the company away from its furniture manufacturing roots. So in a way it’s not terribly surprising that Steinhoff has tilted at a major holding in PSG – itself a well diversified player with interests spanning banking, asset management, private education and agri-business.

Mouton and Jooste also go way back. Older readers may remember Jooste served as a white knight for PSG back in 2000/2001 when banking giant Absa were pushing for a hostile takeover of PSG (they got PSG Investment Bank instead). A friend in need is a friend indeed...

But what makes the deal more intriguing is that in order to secure a 20% stake in PSG for Steinhoff, key shareholders in PSG had to sacrifice their stakes. Most notably, Wiese, who gave up all his holding in PSG – which he acquired about five years ago in a scheme involving swopping his KWV shares for PSG shares. Wiese is not really bailing out of PSG, but rather swopping his PSG scrip for shares in Steinhoff. Wiese could have cashed out his PSG holding at a sizeable profit, so his willingness to remain onboard via Steinhoff speaks volumes about the potential for synergies between Steinhoff and PSG.

Of course, observers have not missed the fact that the combination of Jooste, Mouton and Wiese is a powerful triumvirate – especially if Steinhoff is to adapt the cloak of an investment company and chase new deals.

Already the Steinhoff empire looks impressively broad. There are the European furniture manufacturing interests, a controlling holding in furniture retailer, the JD Group and a majority stake in KAP (which will also hold transport giant Unitrans and building supply assets). PSG brings promising private education venture, Curro, to the table as well as influential agri-business investor, Zeder, wealth manager PSG Konsult and successful emerging bank Capitec. That’s an impressive spread of assets in anyone’s book.

Size wise, Remgro – with a market value of R61 billion – still holds the edge over an enlarged Steinhoff – valued by the market at some R45 billion.

Size – like the cliché goes – may not matter. But certainly Steinhoff – especially with Mouton and Wiese close by – might be perceived as a more dynamic enterprise than Remgro (which has a reputation for consistency in its long term investment goals).

Some may even argue that since the formation of Reinet Investments (a specialised investment vehicle) the Rupert family may concentrate its deal-making endeavours offshore. Of course, Remgro is never to be under-estimated – especially with a R10 billion cash pile at its beck and call.

But even though Remgro did recently surprise the market by snatching a 25% stake in shipping group Grindrod, Steinhoff carries the reputation as one SA’s most adventurous investment enterprises. There seems so much more scope for Steinhoff to grow through acquisition. Could one really rule out Steinhoff – and this would require capitulation by the Mouton family – taking outright control of PSG rather than just playing off synergies between the two businesses?

What about Wiese’s sprawling investment interests – which include strategic stakes in industrial and agricultural equipment supplier Invicta, investment house Brait SA, UK property group Tradehold and vehicle tracking firm Digicore. Could any of these investments find their way into the Steinhoff stable? With Steinhoff already holding a major slice of retail via furniture company JD Group, what would the chances be of having Shoprite, or a part of Shoprite, housed in Steinhoff?

Wiese, of course, may be reluctant to put all his eggs into a Steinhoff basket – remembering that he endured a rather torrid time in the late nineties when a ‘super holding company’ was formed to house his retail and banking interests under the Orion Selections banner.

Still, the convergence of interests held by Jooste, Mouton and Wiese is a development filled with potential, and one that may alter the local business landscape radically in the next few years.



 
 
 
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