In a blockbuster first listing for the new alternative investment company AltVest, cricketer Kevin Pietersen will use the platform to raise R15m by selling shares in his big five game lodge Umganu.
It’s a coup for AltVest, which listed on the Cape Town Stock Exchange (CTSE) on Thursday, with a mission to provide the man-in-the-street with the opportunity to invest in alternative assets — such as game farms, sports teams, private equity, wine farms and rare wine.
Scoring Pietersen — who was born in KwaZulu-Natal but ended up as one of England’s greatest modern batsmen, with 13,797 international runs — as its maiden listing is sure to boost AltVest’s profile. Umganu plans to sell 10-million shares at R1.50 each.
In an interview, Pietersen tells the FM he plans to use the proceeds to “get deeper into the hospitality industry”, specifically luxury lodges. “We’ll look at future acquisitions to build the portfolio … I’ve been very ambitious about everything I’ve got myself into, and this is something where we believe there’s an opportunity to grow,” he says.
He bought his luxury lodge — which is on the banks of the Sabie River and opens into the Kruger National Park — as his family home in 2016. Two years later, he opened it to visitors, accommodating 12 guests at a time. “It is still our second home, but the hardest thing is finding the time to get there, because on a couple of occasions we’ve tried to get there — and June is a case in point — where we want to go, but it’s already booked out.”
You see what Chelsea Football Club are doing in the UK, with getting fans to buy a percentage of the club
— Kevin Pietersen
Asked why he opted to raise funding through AltVest, Pietersen says he liked the inclusiveness of the model. “It allows ordinary South Africans to own something they normally wouldn’t be able to. You see what Chelsea Football Club are doing in the UK, with getting fans to buy a percentage of the club. And there are other brands doing the same thing.”
AltVest, which bills itself as “connecting capital to ideas”, is essentially a platform to allow ordinary investors to buy into unlisted alternative assets. It is chaired by former investment banker Koshiek Karan, who has built a prolific online following as BankerX, and includes Warren Wheatley (a founder of Lebashe, which also owns the FM) and Vestact portfolio manager Bright Khumalo.
Karan tells the FM that AltVest plans to follow the listing of Umganu with four new listings in the next few months. “We had about 2,000 companies approach us to list over the past 18 months but we turned many of them down, because we only want to list the really high-quality opportunities. But I can tell you that finding these high-quality companies is tantamount to finding an honest politician,” he says.
Finding these high-quality companies is tantamount to finding an honest politician
— Koshiek Karan
The plan, he says, is to list eight to 10 new companies over the next year, spanning a wide array of alternative investments — from offshore property and renewable energy to fintech and farming.
“We’re going slow. The last thing we’d want is to list the sexy, blue-chip assets — like 200ft yachts, and portfolios of private jets — if that doesn’t make any money for anyone. But having said that, I’ve seen some phenomenal opportunities in the luxury lifestyle space that ordinary investors just never see. Art, for example, and luxury game lodges, can produce fantastic returns,” he says.
It taps into a wider investing shift towards alternative assets.
The Knight Frank Wealth Report reveals that the world’s ultra-wealthy individuals, who have a net worth of $30m or more, allocate on average 16% of their investments to “passion” items — with art leading the list, followed by classic cars, jewellery, wine, watches, rare whisky, coloured diamonds, coins, furniture and handbags.
That report calculated that the returns from these alternative assets grew 9% last year. This was led by wine and watches (both up 16%), art (up 13%), coins and rare whisky (up 9%), and handbags (7%).
This was boosted by several record sales: Frida Kahlo’s 1949 painting Diego and I sold for $34.9m, Glenfiddich’s The 1950s Collection — four bottles distilled in that decade — sold for just over £1m, while an Omega Speedmaster CK2915-1 watch made in 1957 sold for $3.4m.
According to ratings agency Moody’s, there is now $9-trillion in alternative assets, which include private equity, real estate, infrastructure, private debt and natural resources. Last year $1.1-trillion in new funds was raised. “Demand for long duration returns that exceed low-yielding liquid assets is driving capital into all classes of alternative assets,” Moody’s said.
The largest category of alternative assets was private equity, which Moody’s said had provided an annualised return of 15.7% over the 10 years to March 2021. Real estate, the next best, provided 10.4% annualised returns over that time.
These alternative assets, Karan argues, provide protection against any downturn in equities. “I’m not saying that you should put all your money in alternatives, but you should definitely have some money there,” he says.
As it is, regulation 28 caps the portion of pension funds savings that can be allocated to alternative investments — including private equity or hedge funds — at 15%. But for most South Africans the portion is far lower — not even 2%, Old Mutual estimated last year.
AltVest hopes this will change. This week, it raised R50m by listing on the CTSE, the new bourse set up in opposition to the JSE, by issuing 10-million shares at R5 apiece. (Lebashe also owns part of the CTSE.)
Karan says this money will be used to buy into other alternative assets, which will then be sold to investors on the trading platform.
“We’re looking for companies that have revenue of between R80m and R100m, which are cash generative, and have healthy [earnings] margins with low debt levels and leverage and strong management,” he says.
AltVest will charge those companies a one-off 2% capital-raising fee — which Karan says is far less than the 7% often charged by investment banks.
But with just one asset — Pietersen’s Umganu — AltVest looks similar right now to a special purpose acquisition company. It seems risky for investors to buy into a company with one asset, but Karan says: “The advantage of getting in early is that the upside is disproportionately higher — and I can tell you, we have big plans.”
AltVest is targeting revenues of R41m within three years.
* Wheatley is a director of AltVest and Arena, which owns the FM’
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