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Send  Share  RSS  Twitter  20 May 2009

VENTURES: Fynbos Extend Its BEE Roots

 



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CAPE-based empowerment company Fynbos Media – headed by respected academic Wilmot James – is looking to extend its BEE roots beyond its initial focus on the ‘media, creative and print’ sector.

The group – which now will be known as Fynbos (Proprietary) Limited – was established in 2005 with the aim of capitalising on opportunities in the broader media sector.

To this end Fynbos secured a significant minority interest in electronic media giant MultiChoice SA via an R8 million investment in the public offer by Phuthuma Nathi empowerment scheme in 2006.

By 2008, however, Fynbos had opted to broaden its investment focus.

Whether it was the paucity of suitable media investments available in SA or a genuine desire to broaden the portfolio is unclear. But the development does make Fynbos a far more interesting investment vehicle.

Perhaps what makes Fynbos stand out from the mainstream empowerment crowd is that the group – although still regarded as an early stage investment company – has some ‘muscle on the side’.

Fynbos has a strategic partnership with Leaf Capital, the highly regarded corporate financier headed by former BoE boss Paul Leaf-Wright.

Leaf Capital has carved an enviable niche in Cape investment circles, and was one of the prime movers in the sometimes difficult process of getting Cape Town gaming investment company, Grand Parade Investments, listed on the JSE last year.

Fynbos also has close ties with the Rupert family controlled technology investment company, VenFin.

Cash flush VenFin has a 20% stake in Fynbos, and – perhaps, more significantly - is involved at a “strategic level”.

VenFin has already committed an initial R5 million to Fynbos, and will also consider co-investing with the company on an ad hoc basis.

The new look Fynbos – according the group’s website – “will reassess its strategy of whether to pursue new investments on its own or to join forces with other, similar entities”.

Since deciding to broaden the investment mandate, only one new investment has been made in The Grape Company – a Paarl-based specialist exporter of table grapes since 1997.

Not terribly much is known about The Grape Company save that it holds a wide ranging producer profile – spanning early season harvests from Mpumalanga and the Orange River Region to the Berg River and Hex River areas.

The Grape Company’s exports are concentrated on the supermarket business in continental Europe, the UK, Far East, Canada and Israel.

It seems that future deal flow from Fynbos will see transactions that could see the company taking between a 10% and 35% stake in investee companies with an enterprise value in excess of R25 million rather than gunning for outright control of any business.

Fynbos has also stated that it does not intend to be operationally involved in the investee companies – although it is willing to offer operational advice for sectors in which it has expertise.

One suspects that Fynbos is in a good space in current market conditions where asset prices have been marked down considerably. Having Leaf Capital and VenFin as partners means there should not be a shortage of potential deal flows or a lack of capital to chase (sizeable) opportunities that may arise.

CBN (perhaps mischievously) wonders whether Fynbos’ next big investment might ironically be in the media sector – where its initial focus lay.

Would a tilt at a slice of Independent Newspapers SA be a ridiculous suggestion? Or would that be too ‘old school’ for a tech-savvy partner like VenFin, which might prefer investments in the sexier electronic/online media sector?


 
 
 
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