INVESTMENT company Sabvest remains determinedly low key on the JSE, not attracting nearly as much attention as larger players such as PSG, HCI, Remgro or Brait. Nonetheless, Sabvest boasts an interesting portfolio underpinned by a core investment in international specialist textile manufacturing business SA Bias Industries and several smaller holdings in listed investments like Torre, Datatec, Rolfes, Transaction Capital, Brait and Metrofile.
The problem is liquidity. Neither the Sabvest ordinary shares or low voting N-shares carry much trading volume. Its robust financial status also precludes any possibility Sabvest might raise fresh capital by issuing new shares to a wider spread of investors.
What does stand out in interim results to end-June is that Sabvest holds a not-insubstantial offshore investment portfolio worth about R163m. The bulk is now held in a variety of corporate bonds, but there remains a R46m holding in Alternative Investment Market (AIM)-listed technology company Corero Network Security. Corero is chaired by Jens Montanana, founder and CEO of Datatec, a technology company that Sabvest already holds in its portfolio. Clearly Corero is still a developing business with revenues in the year to end-December 2015 reaching $8.3m.
But it might be significant that only Corero remained after Sabvest purged the equity portion of the offshore portfolio in 2015. If Corero is showing promise, then Sabvest might be tempted to pick up more shares in the open market.
SO far, the banking results released this reporting season have confirmed what economists have long suggested — consumers are in financial distress, thanks to rising interest rates.
Nedbank’s half-year results out on Monday showed "defaulted advances" rose more than 10% compared with the previous period.
CEO Mike Brown says this was due to a combination of customers skipping payments in its corporate bank, along with its retail home loans, credit card and vehicle units; and a new Reserve Bank rule requiring banks to hold distressed restructured loans in its defaults loan book for longer periods.
Were Nedbank not required to adhere to this rule, defaulted advances would have dropped nearly 8% as the bank’s higher bad debt provisions in the corporate and investment bank and rapid retail collections paid off.
At Barclays Africa, the second-largest retail home loan provider, a 77% surge in soured loans in just that unit was the talk of the investment community on Friday.
Standard Bank, the largest home loan provider, is due to report on August 18. Its numbers should tell us whether its customers are also battling.
• Nick Wilson edits Company Comment (wilsonn@bdfm.co.za)
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