PSG Group, a South Africa-based investment holding established and led by one of the country’s wealthiest families, the Moutons, is planning to delist its shares from the Johannesburg Stock Exchange (JSE) as part of its move to deliver value to shareholders.
The planned delisting comes after years of attempting to narrow the gap between the holding’s JSE share price and its intrinsic worth, which the management feels is far greater than the holding’s valuation on the local exchange.
The average discount between PSG and the firms held by the investment holding is more than 40 percent, which can be attributed to investors deciding to invest directly in operating companies rather than through a holding corporation.
While commenting on the value disparity, CEO Petrus Johannes (Piet) Mouton said the group has attempted to decrease the valuation spread by unbundling its stake in Capitec. However, the exercise was not as effective as hoped, and the group continued to trade at a 30-percent discount.
“In all our engagements with shareholders over the past five years, a significant part of the conversations revolved around the discount at which we trade and what PSG Group can do to narrow such discount,” he said.
Aside from the issues around the group’s valuation, Mouton said one of the regulatory limits that the firm has had to confront over time is the JSE’s compliance load.
He also stated that there was too much red tape on South Africa’s primary stock exchange, which was impeding successful dealmaking.
As a result, PSG Group’s management revealed plans to unbundle shares in its subsidiary firms, which include PSG Konsult, Curro, Kaap Agri and CA&S, as well as a 25.1-percent investment in the tertiary education company, Stadio, in accordance with its delisting objectives.
Following the proposed unbundling, the organization will repurchase all shares from stockholders, with the exception of select individuals, including executives, founders and their close relatives.
PSG Group shares were trading at R95.35 ($6.185) as of press time on March 5, giving the company a R12.3-billion ($797.8 million) valuation.
Following the conclusion of the deal, stockholders should get R114 ($7.39) per share, representing a 20-percent premium over PSG’s current share price on the local exchange.