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The SPECtacle

The Reinet fee machine

REINET SHAREHOLDERS – unlikely to be collecting a dividend anytime soon – will probably be casting a critical eye over the performance fee for roughly two-and-a-half years due to the Rupert family of €87m (more than R850m). To put things in perspective, the fee of R850m – which, let us remind readers, was openly disclosed to shareholders when Reinet Investments [JSE:REI] listed – is more than the market capitalisation of well-established industrial second liners such as Argent, ELB Group and Howden.

That little fee outflow – for, let’s be honest, not a lot of asset management over the past couple of years – basically offsets the final dividend due from Reinet’s mainstay in British American Tobacco.

There’s always been an argument that shareholders and directors should be in the same boat. At Reinet that won’t be the case unless the Rupert family decides to forego the performance fee (which is based on Reinet’s share price, which – in turn – is largely linked to BAT’s stock market performance). Uh… not likely.

TheSPECtacle admits that perhaps any short-term misgivings about Reinet are again looking past the enormous long-term value created by the Rupert family in Rembrandt, Richemont, Remgro and even VenFin over the decades. Indeed, Reinet – although plodding along – has kept its value intact in some of the most difficult investment periods in a long, long time. Reinet may well prove a resilient long-term winner – even if it disposes of its stake in BAT.

But Finweek has seen a calculation – posted in a research note by top asset management company Renaissance BJM – that puts the value of future fees to the Rupert family at more than €700m or R6,8bn.

Damn, if that’s correct it’s almost 25% of Reinet’s current market value! No wonder the Reinet discount to underlying value has started to widen a bit.

Brand value at Absa

TheSPECtacle HAD TO have a chuckle when perusing the annual report of Absa Group [JSE:ASA] ahead of the banking giant’s AGM. There’s a delicious irony in former McCarthy CEO Brand Pretorius chairing Absa’s remuneration and human resources committee. Wasn’t it Pretorius who was erroneously overpaid his annual remuneration package during his stint at Bidvest? A fact Bidvest and Pretorius were blissfully unaware of until shareholder activist Theo Botha raised the matter at an AGM.

At least Absa must have been relieved not to have to contend with Botha this year. TheSPECtacle hears Botha jetted off to London to rattle a few cages at the Anglo American AGM.

Can’t buy friends

IT’S NO SECRET JSE-listed banking group Standard Bank Group [JSE:SBK], insurance subsidiary Liberty Holdings and its asset management unit Stanlib have had a tough old time in the media over the past few years. However, you know things are really bad when you can’t even pay your external communications agency to say nice things about you.

Finweek had to alert the respective communications teams it probably wasn’t the most advisable tactic for positive publicity when agency Fleishman-Hillard, which prides itself on delivering online reputation management, was caught referring to documents generated by Standard Bank as “fraudulent” on micro-blogging service Twitter.

Don’ go changing

AN INTRIGUING little cautionary from The Don Group [JSE:DON] has put a lilt in the flat share price of this long-suffering leisure business. Last time we looked it was Don’s travel operations that were donating a sizeable chunk to its bottom line, with its hotel operations (as they’ve been for so many years) looking iffy.

Presumably Don might be looking to add to its travel/leisure segment, but Finweek – as it has argued so many times before – thinks Don needs to unlock the value trapped in its hotel properties.

So we again throw this little enquiry: What about converting the well-positioned hotels to residential developments and going sectional title?  
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