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Investors could have ‘cashed in big’ by buying shares in South African mogul Johann Rupert’s Richemont

A $10,000 investment in Richemont on Dec. 31 2020 is worth $18,372 today.

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South African billionaire Johann Rupert.

Swiss luxury goods holding Richemont, founded by South African billionaire Johann Rupert, is one of Africa’s leading corporate behemoths as far as returning gains to shareholders is concerned.

Richemont, the owner of Cartier, Bodino, Jaeger-LeCoultre and several other luxury brands is one of the most talked-about groups in 2021, as institutional investors with a substantial stake in the luxury goods maker believe it can do more in terms of financial performance and value creation.

Recently conducted research by Billionaires.Africa revealed that the group’s Class-A shares publicly traded on the Johannesburg Stock Exchange and SIX Swiss Exchange experienced a robust double-digit price surge in the period under review.

Since the year began, Richemont shares have increased from R1,311 per share ($81.1) on Dec. 31 to R2,397.40 ($148.2) on Nov. 26, accruing gains of 82.9 percent for shareholders.

As a result of the price surge, the manufacturer’s market capitalization surged by R567.1 billion ($35.06 billion), from R684.34 billion ($42.31 billion) at the start of the year to R1.25 trillion ($77.3 million) as of the time of writing.

A $10,000 investment in Richemont on Dec. 31, 2020 is today worth $18,372

Local or foreign investors with access to Richemont shares on the Johannesburg Stock Exchange would have seen an 82.9-percent gain since the beginning of the year if they had purchased shares in the luxury goods company in December 2020.

This suggests that a $10,000 (R161,741) investment in Richemont last December is now worth $18,372 (R297,136), nearly two times the initial investment.

Rupert, who founded the company in 1988, has seen his net worth surge above the $10-billion mark this year due to increased market value of his stake in the Swiss luxury goods group.

Rupert is now the wealthiest man in South Africa after his net worth surged past Nicky Oppenheimer.

What’s worth knowing about Compagnie Financière Richemont

Richemont, in the first six months of its 2022 financial year, which ended on Sept. 30, has recorded strong double-digit increases across Maisons, businesses and channels, causing its sales to rise by 63 percent from €5.48 billion ($6.18 billion) last year to €8.91 billion ($10.05 billion).

The strong double-digit growth across all business segments, channels and regions compared to the prior year and improved profit margins caused earnings to surge by 686 percent from €159 million ($179.4 million) to €1.25 billion ($1.41 billion).

Richemont has recently found itself in difficult straits as U.S. hedge fund Third Point Management pressured the company to reduce its exposure to loss-making subsidiaries, specifically YOOX NET-A-PORTER (YNAP), to improve its overall financial performance and valuation.

The fund and another long-time shareholder, Artisan Partners, believe the luxury goods group has a low valuation compared to competitors such as French luxury goods company, LVMH.

The company revealed that it is in advanced talks with Farfetch to enhance their partnership, as it moves to leverage Farfetch technology to accelerate its new retail developments.

In line with the key agreement discussed under the partnership, Richemont will sell a minority stake in the loss-making YNAP to Farfetch to reduce its risk exposure to the online retailer and improve its overall valuation.

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Namibian tycoon Quinton van Rooyen’s Trustco wins round in court against JSE

Shares in the group rose 35.56 percent as a result.

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Quinton van Rooyen.

Trustco Group, an investment holding majority owned by Namibian businessman Quinton van Rooyen and his family, has won a round in court against the Johannesburg Stock Exchange (JSE).

The Pretoria High Court ruled that the company may not be suspended from the JSE until the hearing of its review application in September.

The presiding judge, Nicoline Janse van Nieuwenhuizen, pre-dismissed every argument made against Trustco. The judge issued a decision, in which she ordered the JSE to be interdicted and restrained from suspending Trustco shares from trading on the local bourse.

“The grounds of review are all deserving of a proper hearing in due course, and I am satisfied that Trustco has asserted a prima facie right to fair and just administrative action,” she said in her decision.

In response to the news, shares in the group rose 35.56 percent to R0.61 ($0.0367), from a price of R0.45 ($0.0271) at the start of trading this morning.

The increase in Trustco’s share price pushed its market capitalization above R985 million ($60 million) and the value of van Rooyen’s 63.94-percent stake above R630 million ($38 million).

The court also prohibited the JSE from implementing or attempting to implement the decision that Trustco restate its annual financial statements for the fiscal year ending March 31, 2019, as well as the interim results for the six months ending Sept. 30, 2019.

The legal battle between Trustco and the JSE began on Nov. 11, 2020, when the exchange’s authorities claimed that the company had not met the listing requirements for its 2019 annual financial statements and 2020 interim results.

As part of the allegations, the JSE accused Trustco of violating international accounting standards by misrepresenting features of two loans and reclassifying land that it owns.

Trustco questioned the JSE’s authority to order corporations to amend their financial statements. It claimed that only boards have that authority and stated that all transactions had been “exactly accounted for, reported, and disclosed.”

Amid the legal battle between Trustco and the JSE, wary local bourse investors sold their stakes in the company, fearing a potential delisting of its shares, which caused the share price to crash to an all-time low in July before rebounding recently by double digits.

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Ugandan tycoon Charles Mbire to pocket $1.15-million interim dividend from MTN Uganda

Mbire owns a significant 3.98-percent stake in the Ugandan telecom outfit.

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Charles Mbire.

Ugandan multimillionaire businessman Charles Mbire is on track to receive an interim dividend of Ush4.48 billion ($1.155 million) from his stake in MTN Uganda after the telecom group reported a double-digit percent increase in earnings in the first half of 2022.

MTN Uganda is Uganda’s leading telecom service operator.

Mbire, the chairman of MTN Uganda and one of Uganda’s wealthiest businessmen, owns a significant 3.98-percent stake in the Ugandan telecom outfit, which operates as the fourth operating subsidiary of the South African multinational mobile telecom company, MTN Group.

The interim dividend will be paid electronically into his bank account at a later date from the group’s retained earnings of Ush902 billion ($232.4 million) at the end of its 2022 fiscal year. It is his first dividend from the telecom company since its shares were listed more than eight months ago.

The dividend payment follows a significant rise in the group’s earnings in the first half of 2022 despite a 4.9-percent decline in voice revenue, as it looks set to replicate its stellar performance in 2021.

As a result of the company’s strong financial performance, the board of directors approved the payment of an interim dividend of Ush5 ($0.00128) per share for the six months ending June 30, totaling Ush11.95 billion ($28.9 million), which is subject to withholding taxes.

According to data retrieved from the company’s earnings report for the first six months of 2022, its profit increased by 48.1 percent to Ush193.6 billion ($50.2 million) in the first half of 2022, compared to Ush130.7 billion ($33.7 million) in the first half of 2021.

The double-digit increase in profit can be attributed to a 10-percent surge in the company’s service revenue, which was driven by a significant increase in data and fintech revenue, which were more than sufficient to offset the 4.9-percent decline in voice revenue.

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Billionaire Robert Smith’s Vista to acquire Avalara business software for $8.4 billion

Smith directs Vista’s investment strategy.

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Robert Smith.

Avalara Inc., a leading tax compliance automation provider for businesses, has agreed to be bought by Vista Equity Partners for $8.4 billion.

Vista Equity Partners is a leading global investment firm led by America’s richest Black person, Robert Smith.

The transaction received unanimous approval from the Avalara board of directors and is expected to close in the second half of 2022, subject to customary closing conditions such as shareholder and regulatory approval.

Under the terms of the deal, Vista will acquire all outstanding shares of Avalara common stock for $93.50 per share in an all-cash transaction valued at $8.4 billion, including Avalara’s net debt.

According to a source familiar with the situation, Vista has secured a total of $2.5 billion in loans from private lenders as part of the move to bring in institutional investors as co-investors.

The purchase price represents a 27-percent premium over the company’s closing share price on July 6, the last trading day prior to the announcement of the deal.

“For nearly two decades, Avalara has ambitiously pursued its vision of automating global compliance, making tax less taxing for businesses and governments around the world,” Avalara Co-Founder and CEO Scott McFarlane said.

“As a category leader, we believe that continuing to invest in innovation and experience is exciting for our customers, partners, and employees,” he said. “We are excited to work with Vista and will benefit from their enterprise software expertise as we build and improve our cloud compliance platform.”

After the conclusion of the deal, Avalara shares will no longer trade on the New York Stock Exchange. Avalara will become a private company managed by Vista.

Smith has an $8-billion stake in Vista and directs its investment strategy.

He also serves on its executive committee, the company’s governing and decision-making body for all matters affecting overall management and strategic direction. He has supervised more than 570 completed transactions, with a total transaction value of more than $265 billion.

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