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Cape Town - Asset manager Brait’s share price fell sharply for the second successive day after the announcement on Tuesday that it planned an R6bn-odd rights issue from shareholders for acquisitions.
Although the transaction is considered to make sense, in current market conditions investors are not excited about rights issues.
In a full-blown bull market a rights issue would not necessarily have affected the share price so negatively, said Imara SP Reid researcher Steve Meintjes.
Brait [JSE:BAT] wants to issue around 356 million shares in the ratio of three new shares for each one held by a shareholder.
Meintjes declared this a somewhat heavy rights issue.
Brait’s share price fell almost 10% to R18.70 on Thursday, after having dropped almost 6% the day before.
Ever since the mid-January cautionary announcement indicating that a rights issue was being considered, the company’s share price has shed nearly 30%.
Brait plans to spend some R4bn of the money it wants to raise on purchasing a 34.9% stake in retailer Pepkor from Christo Wiese.
In so doing Brait would transform itself from a private equity fund asset manager into an investment company.
The Pepkor stake would be bought from one of Brait’s private equity funds, which had acquired the stake in 2004 when Pepkor delisted.
This week’s announcement by Brait put an end to rumours doing the rounds last year that Pepkor was to relist because Brait’s fund was nearing its end.
Wiese, through his company Titan Nominees, will underwrite the rights issue with R3.8bn.
The aim is that after the deal he will become the biggest shareholder, with 33.3% of Brait. RE:CM executive chairperson Piet Viljoen, currently a major shareholder in Brait, has declared this a smart move on Wiese’s part.
He said that Wiese was buying an asset he knew at a fair price, and much of Brait would consist of Pepkor.
Rudolf Oelofse, a portfolio manager at BJM Private Clients, reckoned it a good deal because investors would gain access to Pepkor, a healthy business generating cash.
- Sake24
For business news in Afrikaans, go to Sake24.com.
Although the transaction is considered to make sense, in current market conditions investors are not excited about rights issues.
In a full-blown bull market a rights issue would not necessarily have affected the share price so negatively, said Imara SP Reid researcher Steve Meintjes.
Brait [JSE:BAT] wants to issue around 356 million shares in the ratio of three new shares for each one held by a shareholder.
Meintjes declared this a somewhat heavy rights issue.
Brait’s share price fell almost 10% to R18.70 on Thursday, after having dropped almost 6% the day before.
Ever since the mid-January cautionary announcement indicating that a rights issue was being considered, the company’s share price has shed nearly 30%.
Brait plans to spend some R4bn of the money it wants to raise on purchasing a 34.9% stake in retailer Pepkor from Christo Wiese.
In so doing Brait would transform itself from a private equity fund asset manager into an investment company.
The Pepkor stake would be bought from one of Brait’s private equity funds, which had acquired the stake in 2004 when Pepkor delisted.
This week’s announcement by Brait put an end to rumours doing the rounds last year that Pepkor was to relist because Brait’s fund was nearing its end.
Wiese, through his company Titan Nominees, will underwrite the rights issue with R3.8bn.
The aim is that after the deal he will become the biggest shareholder, with 33.3% of Brait. RE:CM executive chairperson Piet Viljoen, currently a major shareholder in Brait, has declared this a smart move on Wiese’s part.
He said that Wiese was buying an asset he knew at a fair price, and much of Brait would consist of Pepkor.
Rudolf Oelofse, a portfolio manager at BJM Private Clients, reckoned it a good deal because investors would gain access to Pepkor, a healthy business generating cash.
- Sake24
For business news in Afrikaans, go to Sake24.com.
