It might have surprised market watchers that activist investor Value Capital Partners (VCP) — which has taken a nasty beating in some of its endeavours — has boldly made its eighth portfolio play.
VCP has confirmed taking a 5.28% stake in building supplies specialist Cashbuild, which is in the throes of acquiring Pepkor’s The Building Company (TBC).
The market seems to have mixed feelings about Cashbuild’s TBC deal — understandable since the company has not exactly been a merger and acquisition machine over the decades.
While the timing of VCP’s tilt at Cashbuild is intriguing, it might be more surprising that the investment company had an appetite to make an almost R260m investment at this delicate juncture.
VCP has just followed its rights in gaming company Sun International’s mega-rights offer, and the chances of it being called on to inject fresh capital into certain struggling turnaround positions in its portfolio can’t be entirely discounted.
The portfolio, aside from Cashbuild and Sun International, comprises printing and packaging group Novus, cement maker PPC, technology conglomerate Altron, automotive and battery technology group Metair, services group Adcorp and fintech group Net1.
If past habits are anything to go by then it would probably not be unreasonable to speculate that VCP might look at reinforcing its shareholding in Cashbuild to a position more befitting a “rolled-up-sleeves” activist investor.
Fortunately Cashbuild has a fragmented shareholder register. According to the last annual report the biggest single shareholder was former CEO Pat Goldrick (with a 9.75% stake) and the Public Investment Corporation ranked as the largest institution (with a 8.76% stake).
A further foray into Cashbuild would certainly mute market mutterings that have questioned how much firepower VCP has in its war chest.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.