Venfin still spending

Cape Town - Unlisted technology investment company Venfin reported on Thursday a 15% decline in its net asset value R6.3bn or 2 543c/share for the half-year to end December 2008 from financial year end at end June 2008.

The six month decline seems fairly modest in light of the value crunch seen in most listed investments, especially those with a technological bent listed on the JSE.

The interim report shows Venfin's shares - which trade at 1 700c on an OTC (over-the-counter-basis) - are trading at a sizeable 33% discount on the last stated NAV (which takes into consideration a potential CGT liability of R193m).

Venfin CEO Jannie Durand attributed the decrease in NAV mainly to drops in the listed share prices of Nasdaq-listed VisionChina Media (reducing the market value from R485m to R174m) and Dimension Data (down from R2.4bn to R2.3bn).

As things stand, Venfin's book value of its Didata investment is reflected at almost R3.5bn against a market value of R2.3bn. The difference in book and market value stems from Venfin previously buying Didata shares at higher prices.

Durand said that after taking into account the current volatility in the equity markets as well as an assessment of the underlying value of the investment, it was decided not to provide for an impairment on the book value of Didata.

Worsening industry specific conditions in the local economy also resulted in a decrease in the valuation of vehicle tracking specialist Tracker (down to R584m from R685m at the end of June 2008) and technology group CIV FNS (down to R178m to R65m).

There were unspecified impairments to certain start-ups "whose outlook might have changed in the current economic environment". Venfin's "other investments" showed a decline in value from R557m at the end of June last year to R374m at the end of December 2008.

There was, however, some good news in terms of underlying investment values. Venfin's investments in Sabido (E-Tv) held its value at R1.3bn, while the recent investment in undersea cable specialist Seacom increased markedly from R264m to R470m.

Smaller investments in sports brand marketing company Sail (R186m) and technology venture Britehouse (R181m) showed small increases in value - as did Venfin's "fund investments" (R248m), which are based mainly in China.

But the biggest change in terms of portfolio value was seen in the group's cash holdings, which declined from R1.7bn to just R541m. The group made a couple of sizeable investments during the interim period, investing £43.5m in Dimension Data and pitching another $17m at Seacom.

In November VenFin also made a new investment, taking a 30% interest in telecommunications component supplier CIE Telecomms for R107m.

It would seem Venfin has still not been spooked into a spending standstill by current economic conditions. Durand reported that a few weeks ago VenFin had invested another $12m in Seacom - bringing the total investment into the undersea cable venture to $62m.

- Fin24.com