Johann Rupert, South Africa’s best-known business tycoon, did not look terribly happy at the recent Remgro AGM. At least with South Africa … where he says we are still not setting up a reassuring platform for building up foreign investment.
Still, it’s been a huge year for Rupert, in every sense of the word, though most of the “action” value-wise has taken place outside this country.
The scoreboard will show that the three listed companies controlled by the Rupert family — luxury brands conglomerate Richemont and investment vehicles Reinet and Remgro — now hold a collective market value of more than R2.2-trillion. That’s getting close to 10% of the collective value of the entire JSE.
All three Rupert companies reflect the value of long-term and prudent capital allocation and, especially in the instance of Remgro, unerring patience in sorting out underperforming investments (take a bow, Rainbow Chicken).
As for Rupert himself, he twice this year found himself in the White House as part of South African and Swiss entourages to bend US President Donald Trump’s ear with regard to political and economic matters. It was also an extraordinarily busy year for dealmaking across all three of the Rupert family-controlled listed counters. If there was ever a notion that the wheels of change turn slowly at these companies, the deal trail this year provides a strong contradiction.
The biggest changes have come at Reinet, which was set up in 2008 as a vehicle to house mainly international investments that would provide long-term capital protection.
At the start of the year Reinet announced the sale of its remaining stake in British American Tobacco (BAT) — which finally broke the cigarette habit that Rupert’s father, Anton, had formed as a core cash flow generator in the late 1940s. The group banked a nifty £1.22bn, though the timing was not perfect, as the BAT share price has blazed much higher this year.
By mid-year Reinet had also received proposals to buy out its 49.5% stake in Pension Insurance Corp from financial services specialist Athora Holdings. Reinet’s share of the deal, which will be settled next year, is close to £2.9bn — not a bad return for an initial £400m investment in 2012, which later grew to £1bn after it had participated in further share purchases over the years.
As things stand, Reinet will be sitting with more than 80% of its roughly €6.7bn NAV in cash at the start of 2026. The group’s current portfolio, which is mainly other specialist investment funds and a smattering of direct company investments, still has outstanding investment commitments, but nothing that would mop up a large chunk of the cash holding.
This raises the question of what Rupert — who has earned the moniker Rupert the Bear for his downbeat views — might be planning for the huge cash holding.
So far there is no indication, save for a reference to ongoing share buybacks. The Rupert family has never been afraid to sit on a cash pile — often batting off inferences of maintaining a lazy balance sheet with arguments that cash is an insurance policy in times of uncertainty.
At this juncture, Rupert must be feeling pretty well fortified. With the major global equity markets running hot, he will know that any firm check on exuberant investor sentiment could offer an opportunity to acquire quality assets at knockdown prices.
This level of uncertainty and tension is not good for capital markets, and it makes investing more challenging
— Johann Rupert
Reinet has enormous firepower … it’s just a question of when Rupert thinks it best to commit. It’s worth noting that in late 2008, when many international financial icons had been left wobbling in the wake of the subprime crisis, Rupert ushered Reinet towards the merchant banking business of Lehman Brothers — the biggest casualty at the time. Those assets, as Reinet’s latest financials will show, have been sweated rather well over the past 17 years.
Officially, Rupert has flagged geopolitical tensions, economic risks and market uncertainty. In his interim commentary, he says: “The ongoing Ukraine crisis, the situation in the Middle East and ongoing global trade tariff negotiations continue to cause concern. While interest rates are steadily trending downwards, there is a risk that inflation may increase again. The extent and impact of these worldwide factors remain uncertain.”
He stresses that Reinet recognises the importance of cash reserves in uncertain times.
Talking of ample reserves, Richemont — the owner of Cartier and other top luxury brands — has been generating incredible cash flows of late. The group sits on about €6bn in cash, even after forking out some sumptuous dividends.
While Richemont, despite its fortress of a balance sheet, has not chased deals this year, the market has appreciated the group’s strong performances, especially in the high-margin jewellery maisons. The share is up close to 40% this year — ahead of rival Kering and well ahead of LVMH and Hermès. The LVMH lag will give Rupert no end of joy, remembering attempts to shake up the Richemont board by parties with links to LVMH not too long ago.
It seems unlikely that Rupert will look to drive dealmaking at Richemont. In his interim commentary, he notes: “Looking ahead, it is evident that we will need to continue navigating through uncertain times, given that recovery paths remain unsteady, for instance in China, and that external pressures show no sign of abating. Managing the uncertainty will continue to require agility and discipline, particularly as we face demanding comparatives.”
Locally, it’s also been an action-packed year for Remgro, which has mainly a Southern African asset alignment. Some market watchers feel Rupert might have lost interest in Remgro, with Reinet — and particularly Richemont — commanding most of his attention.
One could easily see Rupert’s hand, though, in the decision to divvy up private hospitals group Mediclinic International, with its shipping company partner MSC taking the Swiss operations and Remgro retaining the South African network (with the other offshore operations still co-owned). Remgro also followed Reinet’s lead in selling off its (much smaller) stake in BAT — and raising a useful sum of about R1bn.
Remgro also finally got its Maziv fibreoptic deal with Vodacom past the competition authorities, which, as Rupert reminded attendees at the recent AGM, precluded Remgro from having to gear up to drive expansionary growth.
There remain challenges across the Remgro portfolio. Heineken Beverages still looks far from convincing, even though the business slashed its losses markedly to R50m. The Rupert family has previously counted the cost of a beer war (back in the 1970s), and AB InBev remains a formidable competitor that is unlikely to give up market share very easily.
Like Reinet and Richemont, Remgro has a sizeable net cash cushion of more than R8bn. This could grow in the year ahead if “portfolio investments” — most notably the minority stakes in banking group FirstRand and financial services dynamo Discovery — are sold down or sold off.
Again, it might not be advisable to hold one’s breath for adventurous dealmaking from cash-flush Remgro. Rupert says, in his annual review, that “we’re living through an innovation boom in both business and technology; an increase in geopolitical tensions and global economic pressures; ongoing wars and trade disputes; cyberattacks; as well as conversations about human intelligence versus artificial intelligence. This level of uncertainty and tension is not good for capital markets, and it makes investing more challenging.”
He stresses that Remgro is adept at grappling with disruptions and retaining discipline in capital allocation. “A year ago, we told you that we never take a short-term view on performance; neither do we get drawn into the trappings of binary thinking.”
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