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Johannesburg - Were insiders so busy filling their boots with Brait [JSE:BAT] stock that the company was forced to issue a cautionary statement?
That was the question buzzing over trading desks after shares in equity heavy-weight Brait fell following what appeared to be quite a positive cautionary announcement on Thursday.
Starting the week at R24 a share, the counter rose sharply over Tuesday and Wednesday hitting a three-year high of R27.99 amid relatively high trading volumes. After the announcement on Thursday morning the shares fell back to a low of R25.50.
The company announced that a possible transaction might "involve a significant equity markets capital raising, the securing of an anchor shareholder, the acquisition of investment assets and an internal reorganization".
Given that Brait is listed in Luxembourg, the transaction need not be related to South Africa, analysts said in reaction. They also observed that private equity firms are once again coming into vogue, particularly as heavyweight investors are seeking out high-growth prospects across the globe.
One prominent example is the decision last year by investment holding company Reinet Investments [JSE:REI] to invest in Trilantic Capital, the former Lehman Brothers unit.
Much of Brait’s value now sits in its stake in retail group Pep which was delisted in in 2003. Typically private equity deals have a five to seven year time horizon which would suggest this investment is reaching maturity in its cycle.
Analysts watching Brait have pointed out that much of its future value will depend on its ability to raise capital for its Brait V fund. By October last year, the fund had attracted R750m. Put in context, the Brait IV fund was closed in December with more than R6bn, making it the largest of its sort on the continent at the time.
Included in the Brait IV fund were the likes of glass heavyweight Consol, attempted turnaround story Buildmax and the so-called "buy-and-build" investment in Capital Africa Steel.
The Public Investment Corporation (PIC) is a major shareholder in Brait, with around 20% of the equity. It is expected that the PIC will be quite vocal about any investments in the local market and will try to ensure that any deal doesn't dilute its stake.
If Brait has secured a significant investor, this could pave the way for another major deal of similar scale to Pep and Consol and judging from the market’s reaction prior to the cautionary announcement, value may be had.
- Fin24
* The author holds shares in Brait.
That was the question buzzing over trading desks after shares in equity heavy-weight Brait fell following what appeared to be quite a positive cautionary announcement on Thursday.
Starting the week at R24 a share, the counter rose sharply over Tuesday and Wednesday hitting a three-year high of R27.99 amid relatively high trading volumes. After the announcement on Thursday morning the shares fell back to a low of R25.50.
The company announced that a possible transaction might "involve a significant equity markets capital raising, the securing of an anchor shareholder, the acquisition of investment assets and an internal reorganization".
Given that Brait is listed in Luxembourg, the transaction need not be related to South Africa, analysts said in reaction. They also observed that private equity firms are once again coming into vogue, particularly as heavyweight investors are seeking out high-growth prospects across the globe.
One prominent example is the decision last year by investment holding company Reinet Investments [JSE:REI] to invest in Trilantic Capital, the former Lehman Brothers unit.
Much of Brait’s value now sits in its stake in retail group Pep which was delisted in in 2003. Typically private equity deals have a five to seven year time horizon which would suggest this investment is reaching maturity in its cycle.
Analysts watching Brait have pointed out that much of its future value will depend on its ability to raise capital for its Brait V fund. By October last year, the fund had attracted R750m. Put in context, the Brait IV fund was closed in December with more than R6bn, making it the largest of its sort on the continent at the time.
Included in the Brait IV fund were the likes of glass heavyweight Consol, attempted turnaround story Buildmax and the so-called "buy-and-build" investment in Capital Africa Steel.
The Public Investment Corporation (PIC) is a major shareholder in Brait, with around 20% of the equity. It is expected that the PIC will be quite vocal about any investments in the local market and will try to ensure that any deal doesn't dilute its stake.
If Brait has secured a significant investor, this could pave the way for another major deal of similar scale to Pep and Consol and judging from the market’s reaction prior to the cautionary announcement, value may be had.
- Fin24
* The author holds shares in Brait.
