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MIC attributes 2013 gains to investment diversification strategy

Mary Bomela

Mary Bomela

Photo by Duane Daws

2nd July 2014

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – Emphasising that the Mineworkers Investment Company (MIC) would continue to be opportunistic if attractive investment opportunities arose, CEO Mary Bomela said on Wednesday that a 31% rise in the value of the group’s investment portfolio to R4.9-billion for the year to February 28 was a product of its focused asset diversification strategy.

This followed a period of portfolio realignment and consolidation, which saw changes being made to the capital structures of two of its key holdings; media group Primedia and hospitality group Peermont Global Resorts.

“The results of the restructurings are cleaner balance sheets and more sustainable debt structures, which will free up management to concentrate on operations and business growth,” Bomela noted at the company’s results presentation, in Johannesburg.

She added that the diversified nature of MIC’s portfolio had diluted its risk over the period.

MIC holds significant interest in companies in the financial, media and technology, industrial and food and leisure sectors.

“The operating environment in South Africa had been tough over the past year, with some of our investee companies struggling more than others. However, because our portfolio is so diversified, strong performances by some of our holdings have been able to compensate for those not faring as well,” Bomela said.

This was evidenced by a 29.6% increase in the net asset value (NAV) of the empowerment investor’s portfolio from R3.2-billion to R4.15-billion year-on-year.

Dividends received from its investee companies, meanwhile, rose 60%, while
“pleasing” gains were secured while reducing debt to 8.4% of NAV, down from 10.5% the prior year.

The company’s cash reserves decreased by 80% over the period, which was directly attributed to the cost of acquisitions during the year.

PORTFOLIO EXPANSION
Further expanding its portfolio over the period, MIC acquired strategic stakes in propellant supplier Puregas and bituminous supplier Much Asphalt, while also increasing its shareholding in the FirstRand Empowerment Trust to 10.5%.

It also acquired the stake of Kagiso Tiso Holdings in the FirstRand Empowerment Trust, increasing its shareholding to 10.5%.

“This marked our first major direct secondary black economic-empowerment (BEE) expansion, a demonstration that the BEE landscape is maturing and BEE investors can successfully transact among themselves and realise value,” Bomela maintained.

Meanwhile, the MIC also formed a joint venture with Rand Merchant Bank over the period, which would focus on investing in high-growth small- to medium-sized businesses that the MIC would not normally directly invest in.

Most recently, the company announced that it had upped its stake in Ascendis Health, the third-largest pharmaceuticals company on the JSE, which would see the MIC issued with a fixed, coupon-convertible, redeemable debenture to the value of R200-million, convertible into Ascendis shares in three tranches.

ACQUISITIONS AND DISPOSALS
Bomela saw continued growth opportunities for the company in future.

“After a period of relatively muted merger and acquisition activity in the private sector, we believe deal volumes will grow significantly in the coming year.

“This opens the door for further acquisitions – and perhaps disposals – as we look to continually improve the balance of our portfolio. We have the balance sheet and appetite for continued, even accelerated growth,” she commented.

Among the industries of interest to the company were telecommunications, businesses that “benefitted from robust annuity income streams” and companies in the healthcare, education, fast-moving consumer goods and retail sectors.

“Increased exposure to JSE-listed entities would be considered,” Bomela added.

The MIC is a 100% black-owned investment company established in 1995 by the Mineworkers Investment Trust (MIT) to create a sustainable asset base for the benefit of mine, energy and construction workers and their dependants.

The company has, over the past 19 years, disbursed over R390-million to the MIT which has, in turn, advanced the money to fund social development programmes.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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