After almost eight decades, Rupert family-controlled entities have finally stubbed out their long-held tobacco interests. This week investment company Reinet disposed of its 2.18% holding in British American Tobacco (BAT) for close to R32bn (£1.37bn). There does, at last count, remain a stompie of a legacy holding of BAT in corporate cousin Remgro, but for all intents and purposes the three listed Rupert family-controlled entities (Richemont being the other) are smoke free.
The statement detailing the BAT share placement, which was completed fairly swiftly, did not provide a rationale for the sale. Reinet had, in the past, sold tranches of BAT shares, and that, along with the flavoursome dividend flows, largely allowed the investment company to build up a diversified investment portfolio.
For now, the official word from Reinet is that it intends using the proceeds from the BAT share placing for its ongoing investment activity
Reinet shareholders might, understandably, be hopeful that a chunk of the BAT proceeds will be used for a special dividend. For now, the official word from Reinet is that it intends using the proceeds from the BAT share placing for its ongoing investment activity.
Reinet’s biggest investment is its major stake in UK-based financial services business Pension Insurance Corp (PensCorp), but it has recently tilted meaningfully at technology investments via Coatue investment platform funds.
Whether Reinet is considering increasing its stake in PensCorp — which is now paying dividends — is not certain. Could de facto asset manager Johann Rupert be ensuring that Reinet has a sizeable war chest, should US markets correct in the months ahead?
One thing is for certain, though. No Reinet shareholder is going to quibble if the group decides to use some of the proceeds to buy back its heavily discounted shares.
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