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The timing of the announcement is rather curious as GPI, which owns a major empowerment stake in the GrandWest casino in Cape Town along with smaller casino interests, is due to announce results early next week.
CET's sale of its GPI stake will be done "a competitive process", which means the best bid (or bids) for all or part of CET's GPI shares will be considered.
It would seem CET is hoping to get a better price for its GPI shares by this process. Selling the shares on the open market would be tricky because GPI has traded rather weakly since listing on the JSE a few months ago.
CET CEO Shaun Rai said GPI - while still "a very attractive company" - did not fit with CET's investment approach of investing in businesses it could control or enjoy significant influence over.
Rai told Fin24.com at the group's annual general meeting on Thursday night that CET was keen to focus on its property business and service sector offerings (like its fast growing security business).
On Friday Rai said much of the proceeds from the GPI sale could be used to reduce debt, chase new opportunities and re-invest in existing CET businesses.
He said CET would also consider buying back shares - something that would show directors' confidence in the group's longer term prospects.
GPI holds roughly 50m GPI shares, which means at current prices the group could fetch between R150m to R200m for its stake. A good number of GPI shares are held indirectly via trusts and empowerment companies, which might make selling the whole parcel of shares difficult.
The bottom line is that CET will realise a fair profit on its GPI shares - most of which were bought at markedly lower levels than GPI's current share price.
Possible buyers for CET's shares could include Trematon Capital Investments and Blue Bay Fund Managers, which rank as two of the bigger GPI shareholders.
- Fin24.com
