RMB Holdings – South African Investment Holding Company
RMB Holdings (JSE: RMH) is a South African investment holding company. It has an investment strategy that focuses on property investments. Promising stability positions itself as a valuable asset for shareholders by keeping track of potential risks to ensure the preservation of the capital and prevention of loss.
About RMB Holdings
RMB Holdings (JSE: RMH) was founded more than 40 years ago by GT Ferreira, Laurie Dippenaar, and Paul Harris, all successful business tycoons of South Africa.
In 1993, the shares were officially listed on the JSE. The listing paved the way for joining in investment with the founders of FirstRand. RMB Holdings expanded its investment strategy and included property investment business.
On June 29, 2020, RMB Holdings unbundled its entire stake at FirstRand, concluding 22 years of partnership after the shareholders voted in favour of unbundling the group’s interests in FirstRand and reinvented itself as a holding company for RMH property.
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RMB Holdings IPO
In 1992, after taking control of Momentum Life, RMB Holdings got listed on JSE with the symbol JSE: RMH. RMH obtained a 30% stake in ABSA and a 28.7% stake in Remgro. Along with that, RMH also transferred its funds from Rand Merchant Bank to Momentum Life which increased its total stake in Momentum Life to 76.4%. The listing allowed the public to co-invest with the founders of FirstRand.
In 2020, RMB Holdings ended their 22 years-long partnership with FirstRand, and now the property remains the group’s only asset.
The revenues have seen a great decline of 34.6% per year in the past five years, and the prices have been significantly volatile in the past three months, which has increased the risk factor.
Out of the top 25 shareholders that own 74.24% of the company, Public Invest Corporation Limited and Royal Bafokeng Holdings (Pty) Limited hold the highest shares of 10.81% and 10.42%, respectively. Steyn Capital Management owns 8.22% shares of the company.
According to analysts, the company may see a growth of up to 34.0% in the Diversified Financials Industry in the next few years
RMB Holdings Investments
FirstRand held 31.4% shares, but as of June 2021, RMB Holdings has only property as its asset.
Atterbury as a developer of commercial, residential and retail property, has notable experience in property development. Atterbury’s portfolio’s important real estate assets are 100% ownership of Grove Mall of Namibia, 20% stake in Mall of Africa, and 50% share in Deloitte head office. RMB Holdings has 27.5% shareholding in Atterbury.
Atterbury Europe consists of four major investments that have 50% shares in Atterbury Romania, 97.5% shares in Atterbury Cyprus, and 25% shares in BreATT. Atterbury Europe partners with major real estate developers allowing it to gain local insights along with expertise. Owing to these partnerships, Atterbury Europe can take advantage of all the opportunities in the real estate sector of Eastern Europe. RMB Holdings has 37.5% shareholding in Atterbury Europe.
RMB Holdings invests in urban development and has 20.3% shares in Divercity, an Urban Property Fund. Divercity focuses on urban renewal by an inner-city model that presents affordable housing, high quality public and commercial space. It aims to provide better urban design.
RMB Holders has 9% shares in the mezzanine, 20% in debt, and 50% equity funding business. Integer property provides unsecured loans as equity to those who have exciting development opportunities but are lacking equity. Their portfolio consists of existing revenue-generating properties along with new developments. The prime focus of Integer properties is the development and ownership of industrial, prime office, and retail properties.
RMB Holdings Business strategy
RMB Holdings has different strategies to ensure maximum value and minimum loss to the shareholders.
RMB Holdings aims to generate the best equity returns in the long term with the help of reinvestment of net cash flows produced by yielding investment of portfolio companies.
The group also looks at managing its current investment portfolio anchored by the partnership with Atterbury Group.
The portfolio companies of RMB Holdings use higher levels of gearing to ensure high equity returns. Due to this strategy, RMB does not have any dividends in portfolio companies and will not have any until the deleveraging of the portfolio companies.
Some of the options for monetisation to ensure the maximum profit to shareholders are inter alia monetisation by separate listing and disposal of portfolio companies.
RMB Holdings is looking forward to managing portfolio companies’ delivery of development pipelines to bring significant value for shareholders.
Along with these long-term strategies, RMB Holdings also has a short-term outlook. Since COVID-19 has caused the local governments in six countries where RMB Holdings operates to implement lockdown, the property sectors in those countries have suffered some tension. This tension is supposed to ease up as soon as the lockdown starts to lift. The current economic distress will impact the ability to execute development pipelines in portfolio companies. Still, with most assets being in Eastern Europe, RMB Holdings may soon have a better position.
RMB Holdings Stock Analysis
JSE: RMH is currently trading at R137.00. Since its unbundling, the stock has seen some massive decline by peaking the highest at R197.00 in May 2021.
Due to current economic distress, the share price has been quite stagnant. However, the data suggests that the price may rise in the future, which may be a good investment.
According to some analysts, the current shareholders should continue to be in their position, but investors may look into other stocks due to this stock’s uncertainty.
Currently, the world is going through economic distress due to the lockdown measures. Since the property is the only asset of RMB Holdings, it is going through significant stress because of lockdown measures since the stores have been closing down. Only the stores selling essential items are not affected much.
Since the pandemic conditions are unpredictable, it’s not possible to forecast the near future very accurately.
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