Paladin defies sector bogey

Cape Town - Paladin Capital, PSG's newly listed private equity spin-off, surged 18% to 235c on Friday in a series of smallish trades.

The share briefly traded as high as 250c.

The surge in Paladin's price - described by a market watcher as probably the "work of excitable retail investors" - coincided with the firm's release of details around a R150m capital-raising exercise.

The strong trading in Paladin means shares are going for more than a 33% premium to Paladin's last stated net asset value (NAV) of 155c per share.

This is most unusual as so-called investment companies - like Remgro, Mvela Group, Sabvest and Brimstone - usually trade at a discount to net asset or intrinsic value.

That discount could be anything between 20% to as high as 50%.

Trident Capital's small cap expert Shawn Stockigt added a historical perspective to Paladin. He reminded that Zeder Investments, another PSG offshoot, also traded at an initial premium on listing. "After the initial excitement the share price settled down, and now trades at a discount to NAV."

Stockigt attributed the initial excitement to the Jannie Mouton factor, noting that PSG's chairperson had a good record in generating deal flows.

Paladin has been described as PSG's "preferred investment vehicle", and holds roughly a dozen strategic stakes in listed and unlisted companies across a variety of industries.

Paladin also holds a major stake in Thembeka Capital, an unlisted black economic empowerment investment company headed by top black entrepreneur KK Kombi.

Paladin has indicated that a chunk of the new capital would be earmarked for its recent investment in Curro Holdings, a private education venture.

The announcement disclosed that 128 million new Paladin shares would be offered to qualifying PSG shareholders at 117c/share - a roughly 25% discount to the last stated NAV.

- Fin24.com