Cape Town - It is somewhat surprising that retail tycoon Christo Wiese was earlier identified by Fin24 as the seller of 50.4m shares in liquor group KWV Limited to PSG for R137m on Monday.
In a R137.2m deal Wiese - via the corporate guises of Titan Nominees and Kortrustfin - effectively swops his KWV shares for a 6% stake in PSG. PSG, which has been snaffling small parcels of KWV shares, manages to snatch 11% of KWV in one fell swoop.
While Wiese has made a tidy profit on the deal, the sale of such a large shareholding in tightly held KWV is unexpected.
Critical role
A few years ago Wiese played a critical role in securing an effective empowerment ownership structure at KWV when he and the KWV Workers' Empowerment Trust bought 20% of the company for R185m from a shareholder that was blocking a proposed BEE initiative.
Wiese, who also owns the upmarket Lanzerac wine estate, initially appeared set for a long tenure at KWV. He served on the KWV board, and some observers even expected Wiese to help the liquor group in its oft tricky shift from co-operative to corporate.
The question at this point is whether Wiese feels that an investment like PSG offers more potential than unlisted KWV?
For one thing most watchers of the unlisted share market believe KWV remains an under-valued counter - and one that could pick up its performance in the weaker rand environment.
Unlocking big values
But Wiese may well feel that PSG's exposure to other unlisted agri-businesses like Pioneer Foods and Kaap Agri reduces risk by diversification and presents a greater opportunity for unlocking big values over the years.
In the past 18 months PSG and empowerment associate, Arch Equity, have aggressively been pursuing shares in unlisted ventures that hold mainly an agricultural focus.
Aside from Pioneer and Kaap Agri, PSG also has exposure to PE-based wool marketing company BKB and Grainco.
It seems much of PSG's value unlocking potential in the medium to longer term term could stem from the array of unlisted investments in the agricultural sector.
Best known a retailer
Wiese, although best known a retailer through his substantial investments in Shoprite and Pep, does have considerable exposure to agriculture via a major investment in Constantia-based Invicta Holdings - which distributes an array of farming equipment from combine harvesters to tractors.
Wiese's most recent major investments included fluorspar miner Sallies (where he has underwritten a rights offer that guarantees a major stake in the company) and Digicore, the vehicle tracking specialist.
PSG CEO Jannie Mouton said PSG now owned about 12% of KWV with the group having squirreled away a few shares in the unlisted liquor group prior to the Wiese transaction.
"A great deal"
Mouton noted: "We have a great relationship with KWV and we know there is considerable value to be unlocked. We think it's a great deal and the years to come will prove it."
At the moment KWV relies quite heavily on its 29.7%% stake in listed Distell for earnings growth with international sales revenue curbed by the strong(er) rand and an over-supply of wine.
Fledgling local sales of KWV brands have been mixed with brandies performing admirably - but wine sales have been flat with trading margins coming under serious competitive pressure.
Wiese - when approached about his KWV stake - has always played down the matter, pointing out that this holding was merely a minority position.
Still, more than a few observers expected Wiese to increase his stake in KWV over the years, possibly to a position where he could even challenge old rival Johann Rupert (the Remgro chairperson) for dominance in the local wine and spirits sector.
"Not easy"
Mouton told Fin24 it was not easy securing the KWV shares from Wiese, although it did seem the retail tycoon was keen to make an investment in PSG.
Wiese's effective buy-in at PSG sees 7.4m shares issued at 1850c/share. On Monday PSG shares surged 7% to 1755c following news of the KWV deal.
The deal also represents Wiese's return to the financial services industry after his key role in transforming BoE from a boutique financial services operation into a major (but short-lived) BoE banking group a few years ago.
BoE, which came under severe pressure in the banking crisis of 2000/2001, is now part of the Nedbank group.
Perhaps the potential of Capitec Bank - whose leading executives (Michiel le Roux and Riaan Stassen) were originally assembled by Wiese to build the defunct Pep Bank - also provided some incentive for the retail tycoon to opt for PSG scrip.
Major stake in Capitec
PSG - via empowerment associate Arch Equity - holds a major stake in Capitec, which is making big inroads in providing cost effective (and profitable) mass banking services.
Other major investments held by PSG include Channel Life (35%) and the JSE Limited (14.7%).
Whether Wiese intends bolstering his stake in PSG remains to be seen. At least picking up meaningful parcels of PSG shares will be far easier than finding suitably sized scrip parcels in the illiquid KWV shares.