Local investors got to see Rupert the Bear growling darkly last week. Chairing the Remgro AGM, Johann Rupert gave short shrift to an optimistic shareholder who suggested South Africa might be on the cusp of renewed international investor interest.
While it is possible to reel off several positive economic and political developments recently — including the happy hosting of the G20 summit in Joburg — Rupert said he just does not see renewed interest in South Africa. “We’re irrelevant in most discussions,” and South Africa is keeping company with “the dogs of the world … that won’t be able to help us”.
More specifically, Rupert warned that no international investor wants to put its intellectual property (IP) at risk, not when it can be confiscated “without compensation”. South Africans associate expropriation with farms, he said, but: “For technology companies, they think of their IP. I know a number of Swiss companies that were keen to invest here. But that’s a no-no … not if they think their IP is going to be confiscated. Do you think a pharmaceutical company will come here and put in a very big plant in Joburg … if the ANC can walk in and say: ‘Give us your patents.’?”
Rupert said unless South Africa changes a number of basic philosophies, the country won’t get the kind of investment needed to create jobs. Whew. I sincerely hope he was just having a bad hair day. But this was more sobering than the ferocious rattling I received on Friday night’s turbulent flight back to Cape Town.
I can’t say I share Rupert’s downbeat view, which I think should be framed by the decision this week by Remgro — the investment company controlled by the Rupert family — to take full control of the South African operations of private hospital group Mediclinic. Its shipping company partner, MSC, will take full control of the group’s private hospitals in Switzerland. The Rupert family, one might infer, can’t be fretting too much about the government making irresponsible tilts at expropriation without compensation if they are willing to take up full control of a large slab of private hospital real estate.
Speaking of tilts, the interim results from gaming group Tsogo Sun might see a few punters fancying the long odds on what is now a rank outsider in the fast-changing gambling sector. Tsogo has been committing hard to physical casinos, which, as the latest results show, remain distinctly ex-growth, while other players have been hitching their growth prospects to the burgeoning sports betting/online games segment. Consequently, Tsogo finds itself at the very back of the field in the online gaming segment and needs to make up plenty of furlongs very quickly to get anywhere near the main pack.
Tsogo finds itself at the very back of the field in the online gaming segment and needs to make up plenty of furlongs very quickly to get anywhere near the main pack
Still, I thought, Tsogo did better in its online gaming division than expected. The group managed a turnaround at ebitda level to the tune of R14m off a 15% hike in gross gaming revenue to R136m. For context, Tsogo’s online offering is still smaller than Goldrush’s online hub, which grew gross gaming revenue 23% to R142m over the same six months.
More worrying for Goldrush was its observation that competitors are splurging on marketing — “which meant that, not only did the growth in top line slow from its previous rates, but Goldrush also had to increase marketing spend to remain competitive”.
Tsogo, one would imagine, has a bit more firepower than Goldrush (which also has the lottery licence to invest in). But more encouraging for Tsogo shareholders was the disclosure that adjusted ebitda exceeded R7m a month for three consecutive months between August and October. Damn, could we hope for R50m adjusted ebitda in the second half?
Tsogo intends growing its online efforts aggressively, with a new CEO and experienced senior managers already appointed. Tsogo added that Bet.co.za launched more than 1,000 new games in November 2025. But here’s the rub: “Based on the priority to create a larger online betting business, and in order to expedite growth, this division may need to sacrifice a portion of its profits generated in the short term for the required investment.”
More intriguing, though, is Tsogo’s admission that acquisition opportunities that offer scale, systems and synergies will be considered. Now, I did mention Goldrush earlier … speaking, of course, as a very small shareholder. Online betting acquisitions would surprise me, unless these were “mom and pop” operations.
Tsogo has hefty capital commitments at its physical casinos. The group is well into a radical revamp of the recently acquired Emerald Resort & Casino near Vanderbijlpark, but this spend will start paying off only from 2027. A far bigger project is the development of a casino in Somerset West, which will break Sun International’s long-held monopoly of the Cape Town casino market through GrandWest. The Somerset West-Strand node is a fairly well-to-do market, though I am still to be convinced that this is the best capital allocation decision in a more fluid gaming sector. I was heartened, though, to see the development cost pencilled in at R1.29bn, a mere snip compared with Sun International’s more than R4bn splurge on the Time Square casino in Pretoria. Still, R1.29bn adds to Tsogo’s debt, which stood at R6.8bn at the end of September.
Perhaps with the Somerset West casino up and running, Tsogo might look to cash in its significant minority stake in Sun International subsidiary SunWest, which operates the GrandWest and Golden Valley casinos? Tsogo’s 50-million shares in hotel group City Lodge, I see, have already been sold for R200m.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.