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Ethos Capital lifts interim NAV

19th March 2018

By: Anine Kilian

Contributing Editor Online

     

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JSE-listed Ethos Capital’s net asset value (NAV) increased to R1.9-billion during the six months ended December 31.

The company said in a statement on Monday that it increased its underlying exposure to 11 companies, with invested capital equal to 39% of NAV.

The company reiterated its long-term strategy of fully investing NAV, while retaining sufficient liquidity to meet commitments.

"Across the various funds, Ethos is in exclusive discussions on seven investments. Two have been signed and are subject only to regulatory approval. A further two investments are well progressed and have signed term sheets," the company said.

Ethos, meanwhile, said underlying attributable earnings before interest, taxes, depreciation and amortisation growth across the various funds' portfolios over the past 12  months had been relatively modest. 

The Ethos fund teams,  together  with  the  in-house value-add  capability,  have  spent  significant  time  and  effort  to  ensure  that  each  portfolio  company  is  optimally  positioned,  both  strategically  and  operationally,  to benefit  from  the  turnaround  in  the  economic  cycle.

“With economic prospects  likely  to  improve  in  the  medium  term,  we  believe  the  value-accretive  strategies implemented  at  portfolio  companies  should  start  delivering  accelerated  growth,” the company said.

Gross domestic product growth remained subdued, consumer confidence  was  soft and  policy  and  political uncertainty  severely  impacted  companies'  strategic  deployment  of  capital  and  investor  confidence.

“South Africa's longer-term outlook has,  however,  improved  significantly  of  late.  Political  changes, both  within  the  African National Congress  and  also  in  national  government  with President  Cyril  Ramaphosa  taking  over  as  South  Africa's  new  President  in  February, are  likely  to  result  in  a  significant  uplift  in  both  consumer  and  business confidence.”

Going forward, Ethos’ pipeline of opportunities  across  all  of  the  funds  remains  very  strong. 

While there is  improvement  in  the  macroeconomic  environment,  it  is  important  that  the funds  continue  to  invest  selectively  in  assets  that  have  a  robust  and  defensible  business  case.

Across the various funds,  Ethos  is  in discussions  on  seven  investments.

While there  can  be  no  guarantee  that  all  of  these  transactions  will  close,  Ethos  remains  confident  that it  will  be  able  to  close  on  the  majority  of  these  investments.

The amount  of  capital  required  by  Ethos  Capital  into  these  transactions,  should  the  funds  be  successful  in  closing  all  of  them,  would  be  about  R400-million.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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