Cape Town - Gaming investment company Grand Parade Investments (GPI), which released interim results on Tuesday, looks like it is picking up some institutional interest.
GPI, which listed in 2008, has to date mainly boasted a community investment base along with a handful of boutique investors like Blue Bay, Trematon Capital Investments and Cape Empowerment Investors. Institutional interest has, so far, been limited to a handful of unit trust portfolios of which Investec and Prudential were the most significant.
But comments accompanying the half-year to end-December results showed a post balance sheet event that involved the issuing of 12.75 million new GPI shares at 235 cents per share to an unnamed institutional investor.
The share issue, effected at a 6% discount to average weekly volumes in early February, raises nearly R30m for GPI.
The share issue is interesting since last year GPI bought back 19.4 million shares at an average price of 224c/share. During that time, GPI's Share Incentive Trust also acquired 7.6 million shares in GPI at 220c/share.
The emergence of a meaningful institutional participation at GPI is not surprising. The company has some choice gaming assets - including a 29.5% stake in SunWest (the operator of the GrandWest casino) and a 31.5% stake in Real Africa Holdings (which owns meaningful minority stakes in four Sun International casinos in Cape Town, Durban, Gauteng and Port Elizabeth).
GPI has recently proposed buying out its Australian partners in limited payout machine operator Thuo Gaming in a R170m transaction.
There is also an enticing value proposition for institutional shareholders, with GPI's interim results reflecting a net asset value of 368c/share. That means GPI shares are currently discounting the company's underlying value by more than 30%.
GPI's interim results showed a 14% decrease in headline earnings, with major investments like SunWest and RAH chipping in less profits.
GPI CEO Adrian Funkey, however, noted that downturns in core casino investments had been balanced by strong growth in the LPM market - especially in the Western Cape.
He said Thuo Western Cape grew earnings by 25%, while Thuo KZN bumped up revenues by nearly 40%. Funkey said the 2010 Fifa World Cup would help the company's leisure industry investments in the second half.
He noted that GPI was a 33.3% shareholder in Grand World Vision Events, a venture that had secured the contract to manage the Fifa Fan Fest 2010 at the Grand Parade on behalf of the City of Cape Town.
- Fin24.com