Remgro – Investment Holding Company Portfolio

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Remgro (JSE: REM) is an investment holding company that creates sustainable and valuable stakes. Remgro is one the leading publicly traded companies in South Africa and has a portfolio of investments mainly in Healthcare, Financial Services, Media, Sports, Banking, Food, Personal care, Mining, and Petroleum.

About Remgro

Remgro’s history goes back to the 1940s with the establishment of Rembrandt Group Limited, which was previously known as VoorBrand Tobacco Company.

In 2000, Rembrandt Group Limited went through corporate restructuring, which solidified the group’s investment from four companies to two companies were Remgro and VenFin.

In 2015, Remgro was listed as the 9th biggest publicly traded company in South Africa and ranked 1436th in the world.

With the investment portfolio of over 30 diverse companies, Remgro follows a decentralised strategy for managing its investments. Rather than micromanaging the business units of its investees, Remgro aims to support the investments.

Remgro

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Remgro IPO

Remgro was listed on the JSE with the symbol REM in 2000 under Financials, Financial Services, Investment Banking and Brokerage Services, and Diversified Financial Services. The company’s Initial Public Offering was on July 18th, 2003.

The general public owns about 32.7% of the shares in the company and, as per the Equity method, receives some voting rights. Despite being on the lowest priority in investment recovery, have some rights to recover the company’s assets and share profits of the company.

Remgro’s half of the shares are owned by institutions that own about 52.6% of the stake. From the top 25 of the shareholders that own about 54.72% of the shares, Public Investment Corporation Limited owns the largest shares of about 15.04%, Allan Grey Limited comes next by owning about 8.56% of the shares, and Rembrandt Trust(Pty) Ltd. comes third by owning 3.29% of the company’s shares.

The shares of Remgro rose 1.5 per cent in 2016 after the completion of a $676m rights offers to fund the purchase of a stake of SABMILLER in the Distell Group.

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Remgro Investments

Remgro has about 30 companies in diverse units such as Healthcare, Finances, Media, Sports, Food and Personal Care.

Some of the investments of Remgro are in the following companies. However, the investment portfolio is not limited to the companies listed here.

Mediclinic

Mediclinic provides high quality clinical and hospital services in South Africa, Switzerland and UAE. Remgro holds about 42% of Mediclinic shares. The group has a primary listing on London Stock Exchange and a secondary listing on JSE.

RMB

RMB is an investment holding company. Remgro owns 28.2% of the RMB shares.

FirstRand

FirstRand is a holding company that operates in South Africa and all across Africa. FirstRand is listed on the Namibian Stock Exchange and Johannesburg Stock Exchange. Remgro owns about 13.5% of the company’s shares.

Unilever South Africa

Unilever South Africa is a leading manufacturer of Beauty, Personal Care, Home, and Food products. It is a subsidiary of Unilever. Remgro owns about 25.8% of Unilever South Africa shares.

RCL Foods

RCL Foods is the leading South African manufacturer of Food products. Remgro owns a large share of 77.5 per cent of the company. Its producer distributes the manufactured products of RCL Foods.

Total South Africa

Remgro owns 24.9 per cent of Total South Africa’s shares. Total South Africa focuses on marketing products and services. Along with that, it also leads initiatives to promote women entrepreneurship and support the community and create awareness. Total South Africa also works on refining and supplying renewable energies such as solar power generated electricity.

Remgro business strategy

Remgro, for the best interest of itself and the investee companies, works on a decentralised business strategy to manage its investments and avoids direct executive representation.

Decentralised management

Remgro has a philosophy of decentralised management of investments and considers it best for the interest of Remgro and the portfolio companies.

Operating subsidiaries of Remgro such as RCL Foods, Distell, Wispesco, and Siqalo are all completely autonomous in terms of the Board of directors.

Both listed and non-listed portfolio companies are also not micromanaged by Remgro and are only provided managerial, strategic, and financial support. Remgro does not directly involve itself in any of the business models of its investee companies.

However, Remgro does fulfil its responsibility as a shareholder by exercising the rights of a shareholder in terms of voting and governance.

Investment strategy

Remgro only invests in opportunities that provide significant and sustainable value to the company in the long term. South African investments, along with investments in other African countries, are a priority for Remgro. However, opportunities with significant value too are welcomed at Remgro.

Remgro aims to focus on Primary Sector such as Finances, Infrastructure, Healthcare and Consumer products. Remgro’s investment strategy also prefers investing in shares and assets that are unlisted.

Remgro Stock Analysis

JSE: Remgro shares are currently at 12,100 ZAR. Over the past three months, the share price has remained significantly stable.

Over the past five years, REM has seen some great losses of about 45.8 per cent annually. However, Remgro is forecasted to become profitable and grow by 79.3% annually in the next few years.

In June 2020, due to COVID-19 lockdown measures, Remgro earnings dropped by 61%. This massive drop was due to factors such as low-interest income and measure losses during lockdown measures.

Bottom line

Though currently unprofitable, the performance of Remgro is hoped to improve over the next few years as the lockdown measures ease. Since the world is going through economic and political distress due to the COVID-19 pandemic, Remgro too is affected by it. As long as the pandemic conditions are going to remain unpredictable and the global economic situation does not improve, the company’s stock and economic performance cannot be accurately predicted.

However, Remgro investments in primary care services that manufacture essentials can bring earnings even during these difficult economic situations.

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