Corpcapital, the financial services firm fresh from fending off allegations of corporate governance failure, signalled on Friday a change in strategy so that it could realise its investments more rapidly.
Chief executive Jeff Liebesman, said Corpcapital already had "a proud history of giving back to our shareholders", and the plan outlined on Friday was just a more aggressive approach.
New investment would be curtailed so that wealth for shareholders would be unlocked.
Liebesman said Corpcapital had grown net asset value at 52 percent a year compounded since 1996. It had grown from seed capital of R28 million to a company of R1.5 billion and, in the process, shareholders had been given back R633 million.
Non-investment businesses such as property asset management, advisory and trading activities would continue to be nurtured and funded for growth.
"We have a good position in the market with our property business," he said. "Some 75 percent of our balance sheet is held in private equity E many of these we need to nurture and grow.
"There is no haste about this. We have cash in the bank and there is no pressure on us to sell anything. There are no deadlines. Our investment strategy has always been to buy assets, add value and exit. This is a continuation of what we have always done.
"The big change is that, for the moment, we will not be reinvesting proceeds, other than where necessary to support existing investments and our non-investment business's growth strategies. The excess capital will be returned to shareholders."
Where assets were listed or capable of being listed, assets in specie might be returned.
He said it made little sense to make new investments knowing that these would be valued by the stock market at a discount to their real value. It also made sense to realise investments that were currently undervalued.
The announcement on Friday followed a cautionary published on February 19. Because Corpcapital is rated as an investment company, it generally trades at a discount to net asset value, a discount exacerbated by market conditions affecting small capitalisation companies.
"In these circumstances, the board does not expect the value of the company, its underlying assets and its management's ability to continue growing these assets to be reflected in the share price, unless there was a change in the strategy."
Corpcapital's shares closed at R1.23 on Friday, up 8c on the day and 21c for the week.
Publisher: Business Report
Source: Edward West
Corpcapital to halt new investments.
Posted On Monday, 03 March 2003 02:00 Published by eProperty News
Corpcapital, the financial services firm fresh from fending off allegations of corporate governance failure, signalled on Friday a change in strategy so that it could realise its investments more rapidly.
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