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Johannesburg - Private equity powerhouse Brait said it will pursue investments in the lower-end cash consumer market and the infrastructure sector, as it believed they will offer the highest return in the next two to three decades.
That's according to CEO Anthony Ball, who spoke to Fin24.com on Thursday following the release of Brait's interim results for the period to end-September 2009.
Attributable earnings increased by 6% to R77m while profit from operations decreased 14% to R126m, as Brait exited a major holding in information technology firm NET1 UPS.
Net asset value came in 7% lower at 1 315 cents per share.
Two sectors which excite Brait management are the lower-end cash consumer market as well as infrastructure-related projects.
According to Ball, firms with exposure to consumers in the Living Standard Measure (LSM) one to three categories are likely to grow over the next 20 to 30 years. Examples of listed companies include Consol, Pepkor and Premier Foods.
Still no joy fromBuildmax
On infrastructure, Ball said the sector continued to offer value despite being a popular choice among investment houses over the last few years.
Asked about the decision to exit from the NET1 investment, Ball said: "We still believe it is a good company, but as a private equity investor we need to sell to realise profits and we needed to plan for when there is sufficient liquidity [in the market] to make our exits."
An investment which has not yet delivered for Brait has been its stake in infrastructure business Buildmax. In October 2008, Brait spent R200m on a 14.8% stake in Buildmax at 150c/share. It also paid another R132m to acquire a further 9% at 110c/share. Since then, the share price has fallen back to 77c.
Contained in the results for Brait was a mention of a R100m investment fund. Ball explained that while Brait typically made investments of between R100m and R1bn, the company also saw the opportunity for a another fund to make investments in smaller businesses which offered high growth potential.
Stephen Meintjes of stockbrokerage Imara SP Reid has issued a "hold" recommendation on the stock.
Shares in Brait rose 1% (18c) to 1 880c on Thursday.
- Fin24.com
*The author holds shares shares in Brait and Buildmax.