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VENTURES: Resourced Wiese's Latest Manoeuvres


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RETAIL tycoon Christo Wiese – best known for his lucrative investments in Cape-based supermarket group Shoprite and low cost fashion conglomerate Pepkor – has been appointed to the board of fledgling mining conglomerate Pallinghurst Resources.

The move highlights Wiese’s other great love – speculating in mining companies.

Pallinghurst is a mixed resources venture headed by the highly respected mining executive Brian Gilbertson, who was instrumental in the formation of global mining powerhouse BHP Billiton.

Wiese will serve on the Pallinghurst board as a non-executive. But some observers have interpreted the move as the retail tycoon wanting to keep close tabs on his sizeable investment in Pallingshurst.

Wiese – via a nominee company – holds a 16.5% stake in Pallighurst, which was worth around R260m at the time of going to press. The truth is that – since listing at around R10/share in late 2008 – the Pallinghurst share price has dribbled down to current levels of under 230c.

It’s difficult to determine what price Wiese paid to participate in Pallinghurst, but the retail tycoon can’t be charmed at a buckled share price that heavily discounts the tangible value of the mining company’s interests in platinum, base metals, gemstone and luxury brands assets.

Last year Wiese put even more capital into Pallinghurst via a rights issue that was used to raise R800m. One wag quipped that Wiese’s board appointment at least allowed him to compensate for the paper losses at Pallinghurst by collecting director’s fees.

On a more serious note, Wiese is a very influential businessman and investor. He brings a heap of corporate experience to Pallinghurst, and probably some fresh perspective as well. Outside his retail cluster, Wiese has served on numerous boards of companies – ranging from financial services specialists to liquor companies.

It must be remembered that Wiese has extensive mining investment experience. He scored handsomely from Ocean Diamond Mining (ODM) in the late nineties. Readers will remember that Wiese was instrumental in steering ODM away from Trans Hex, and into a premium priced buyout deal with Namco (which later was sunk by its debt load).

Wiese, of course, has made some rather costly mistakes in the commodity space.

His unwavering backing of junior fluorspar miner, Sallies, lost many, many millions of rand as the business lurched from crisis to crisis. But Wiese more than made up these losses by cleverly backing GoldOne International, which later fell under the control of Chinese investors willing to pay top dollar for SA gold assets.

Whether Wiese will have significant sway at Pallinghurst remains to be seen. Certainly there may be scope for corporate action in any of the investment incubators at Pallingshurst if Wiese assume the mantle of deal-maker.

Wiese is also not afraid to wheel and deal in his investments, remembering that he sold his large stake in KWV for a significant minority stake in PSG and then swopped the PSG stake for a share in furniture retailer and manufacturer Steinhoff International. CBN wonders, though, whether Wiese’s retail skills will be brought to bear on the development of Fabergé, the resuscitated luxury goods brand controlled by Pallinghurst.

Pallinghurst bought into Fabergé in 2007 and re-launched the brand in late 2009. Fabergé’s retail presence has been expanded to include Geneva, London, New York and Hong Kong.

It’s a fascinating scenario that will bear close watching in the months ahead.

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