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STELLENBOSCH-BASED investment company PSG appears to be dealing with its Achilles heel by lumping its newly merged asset management business into PSG Konsult. Apart from the curious anomaly of having an asset management business with a head office in Hermanus, the big questions are about whether the transaction means PSG Konsult will be listed shortly and whether there’s going to be an acquisition spree.
Most of PSG’s major investments – Capitec Bank, Paladin Capital and Zeder – are listed. After the transaction, PSG will own around 72% of the new-look business.
The PSG Asset Management cluster – which previously consisted of PSG Fund Management, PSG Alphen, PSG Tanzanite, PSG Absolute Investments and PSG Future Wealth – was always a bit of a weak spot for PSG. Profit performance has been rather underwhelming – at least compared with other segments of PSG’s investment pie.
In the half-year to end-August 2010 PSG Asset Management chipped in just R10m to PSG’s bottom line. On the other hand, PSG Konsult has proved a fairly resilient business capable of generating decent cash flows. In the last interim period PSG Konsult contributed more than R30m to PSG’s earnings.
In our opinion, having PSG Asset Management tucked under PSG Konsult probably enhances the chances of corporate action. The asset management arm – which has R15bn under management – certainly does need to bulk up considerably if it wants to play in the top leagues against Investec, Allan Gray and Coronation.
In his official press statement, PSG Konsult CEO Willem Theron noted: “These steps take PSG Konsult into a new era, allowing it to play an even bigger role in the financial services sector.”
Presumably a listing could provide options in terms of fund raising should PSG Konsult secure a series of boutique buys – even possibly pulling off a gorilla. Theron says a listing is certainly on the company’s mind. “But it’s not something we have to do this year, as we still have adequate capital available. More likely it will be something in the next three years.”
Most of PSG’s major investments – Capitec Bank, Paladin Capital and Zeder – are listed. After the transaction, PSG will own around 72% of the new-look business.
The PSG Asset Management cluster – which previously consisted of PSG Fund Management, PSG Alphen, PSG Tanzanite, PSG Absolute Investments and PSG Future Wealth – was always a bit of a weak spot for PSG. Profit performance has been rather underwhelming – at least compared with other segments of PSG’s investment pie.
In the half-year to end-August 2010 PSG Asset Management chipped in just R10m to PSG’s bottom line. On the other hand, PSG Konsult has proved a fairly resilient business capable of generating decent cash flows. In the last interim period PSG Konsult contributed more than R30m to PSG’s earnings.
In our opinion, having PSG Asset Management tucked under PSG Konsult probably enhances the chances of corporate action. The asset management arm – which has R15bn under management – certainly does need to bulk up considerably if it wants to play in the top leagues against Investec, Allan Gray and Coronation.
In his official press statement, PSG Konsult CEO Willem Theron noted: “These steps take PSG Konsult into a new era, allowing it to play an even bigger role in the financial services sector.”
Presumably a listing could provide options in terms of fund raising should PSG Konsult secure a series of boutique buys – even possibly pulling off a gorilla. Theron says a listing is certainly on the company’s mind. “But it’s not something we have to do this year, as we still have adequate capital available. More likely it will be something in the next three years.”
