stellar capital partners agrees to sell security technology unit

19 June 2018

By: Marc Hasenfuss   Source: BusinessDay

Investment group Stellar Capital Partners (SCP) has officially put security technology subsidiary Amalgamated Electronic Corporation (Amecor) up for sale, and is on the verge of securing an empowerment partner for subsidiary Prescient Investment Management.

These developments come days after SCP asked shareholders to approve a rejigging of its preference share structure to ensure that the company had extra room to manoeuvre in its efforts to unlock value for shareholders.

Earlier in 2018 SCP indicated it was keen to dispose of its industrial interests.

On Monday SCP indicated it had received a number of unsolicited expressions of interest to acquire Amecor, which was previously listed on the JSE. Amecor is the largest supplier of security communication equipment and networks in the South African market.

The company has also been a consistent profit performer with reliable cash flows.

Market watchers are keen to see what price tag will be dangled over Amecor, which was acquired by SCP in 2016 for about R270m.

Stellar Capital also confirmed negotiations with an unnamed empowered entity to invest in Prescient. The company said that the transaction under discussion would see Prescient becoming black-controlled, which would dilute SCP’s shareholding in Prescient.

SCP — which trades at a wide discount to its sum-of-the-parts valuation — has lately been the subject of speculation around efforts to rapidly unlock value from its portfolio with three investment entities building meaningful equity stakes in the company in recent months.

These are Hollard-aligned investment firm Westbrooke, Rational Expectations (linked to Capitec Bank founder Michiel le Roux) and financial services group Genesis Capital Partners.

Retail tycoon Christo Wiese remains one of the biggest shareholders in SCP and there have been whisperings that his influential stake is coveted by other big shareholders.

Aside from Amecor and Prescient, SCP also holds a major stake in listed industrial services business Torre and unlisted electronics manufacturer Tellumat.

SCP carries a sum-of-the-parts value of about 106c per share, but trades at about 62c on the JSE.

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