Reunert & PSG to start a new financing company
Monday, 2 October 2006
Electrical engineering and electronics group Reunert and financial services company PSG Group today announced that they will partner to form a new financing company that will commence business on 1 December 2006.
The new entity will be owned by Reunert (49.9%), PSG Group (39.9%), Michiel le Roux (6.7%) and other individuals (3.5%). Reunert is contributing RC&C Finance Company, better known as Nashua Finance, whilst PSG and the other shareholders are investing R376.5m in the new niche financing venture. The bridge financing company ZS Rational, in which PSG and Michiel le Roux has a majority stake, will also be acquired and will form part of the new entity. The new company will start with R500 million of capital.
RC&C has a financing book of R1.4 billion that consists mainly of providing asset backed finance to customers of companies within the Reunert group.
In addition to expanding the existing RC&C and ZS Rational businesses, the company will focus on other niche markets in the financing arena such as financing provided against clients' existing share portfolios. These portfolios within the PSG group alone amount to more than R24 billion, and PSG will conduct its clients' scrip financing through the new company.
Reunert's Chief Executive Gerrit Pretorius says the deal provides an ideal opportunity for growth in the group. "We will continue to serve our Nashua customers, but can now also, with the right partners, provide finance to people outside the group."
"In the short-term the deal will dilute Reunert's earnings by about R12 million, but we expect this to change in due course, and a return on equity of more than 20% in the longer term is on the cards."
According to Jannie Mouton, Executive Chairman of PSG Group, PSG is excited about the prospects of the new company and it will utilize part of the proceeds of its current rights issue to fund the investment, thereby strengthening the balance sheet of the new company.
Michiel le Roux (co-founder and former CEO of Capitec Bank) will serve as Chairman of the new company whilst Johan du Preez (former CEO of Innofin) has been appointed as CEO. "We believe that there is ample scope for a financing company that is able to accurately assess the underlying risks in these under serviced niche markets and that can provide a personalized and highly efficient service to its clients" says du Preez. "It certainly represents an exciting opportunity with huge growth potential."
The Board of Directors will consist of Gerrit Pretorius (CEO, Reunert), Pat Gallagher (Executive Director, Reunert), Dave Rawlinson (Financial Director, Reunert), Jannie Mouton (Executive Chairman, PSG), Jaap du Toit (Executive Director, PSG), Chris Otto (Executive Director, PSG), Michiel le Roux (Chairman), and Johan du Preez (CEO).
Enquiries should be directed to Carina de Klerk at 083 631 5743
Reunert Limited manages some well known brands such as CBi-electric, Nashua, Nashua Mobile and is the exclusive distributor of Panasonic products in South Africa. It also holds a 40% interest in Siemens Telecommunications. Reunert has recently been included in the ALSI 40, the list of the top 40 shares on the JSE.
Reunert (JSE code RLO) has a market capitalization of R14 billion.
PSG Group is a financial services company which holds controlling and strategic stakes in a number of companies in the financial sector. It founded Capitec Bank Holdings Limited (specializing in the lower end of the market) with Michiel le Roux some 5 years ago.
Over the past ten years they have consistently and successfully identified strongly entrepreneurial businesses that have sound investment sense with no fanfare but rather solid business practice and good management. They initiate or acquire strategic and controlling stakes in these businesses, and assist them on a financial and strategic level to generate value for shareholders.
PSG (JSE code PSG) has a market capitalization of R3.6 billion.
MICHIEL LE ROUX
Michiel le Roux came up with the idea to convert three hundred cash loan stores to a bank for the unbanked, which led to the creation of Capitec Bank. He was the first CEO of Capitec Bank.
JOHAN DU PREEZ (41)
Johan du Preez has ample experience in medical risk management (both in South Africa and the USA where he worked for 5 years), insurance, and retail investments. He worked for the Sanlam group for 8 years and is well respected for his inspirational leadership skills. During this period he was first involved in the turnaround of Sanlam Health (CEO from 1999 to 2001), whereafter he lead Innofin (CEO 2002 to 2004) to a position of superior performance and industry leadership. Innofin operates in the affluent market segment of the retail investment market and was launched in 2001 as a joint venture between Sanlam and Macquarie Bank of Australia. Johan also served on the Executive Committee of Sanlam Life.