Brait's value topples due to Covid-19


Brait's value topples due to Covid-19

Published Date: 2020-06-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Brait's value topples due to Covid-19

The investment holding company says a R5.6 billion equity capital raise also contributed to a big decline in its net asset value per share.

Brait's portfolio of investments is worth a lot less due to the impact Covid-19 and lockdowns across the global have had on consumer-facing companies. In particular, its Virgin Active chain of health clubs has felt the strain. A big rights issue earlier this year has also reduced its net asset value per share, its key reporting metric as an investment holding company.

It said the issuance of 848 million new shares as part of a R5.6 billion equity capital raise in February was mostly to blame for a slide in its NAV over the year due to the share dilution. However, it also reduced the value of the companies in its portfolio as a result of Covid-19.

The group reported a headline loss per share of R27.99 for the year to end-March from a R22.19 loss the previous year. Its net asset value (NAV) per share declined to R8.27 from R17.46 last September (including the share dilution) and R41.80 in March last year.

The value of its stake in health club chain Virgin Active declined by 46% to R9.4 billion, while Premier's valuation declined by 31% to R6.1 billion. The valuation of New Look fell 18% to R940 million - but Brait continues to value its 18.5% equity holding in the women's fashion chain at nil. Virgin accounts for 42% of Brait's assets, followed by Premier at 27%, Iceland at 6% and New Look at 5%. It said all its portfolio companies had proactively implemented plans to mitigate the impact of the virus.

Brait announced the capital raise as part of its strategy to pay down debt before realising value from its existing assets over the next five years and returning capital to shareholders.

As part of its restructuring, Ethos was appointed as its new investment advisor and took a stake in Brait through the rights issue, as well as an additional R350 million top-up subscription. Ethos includes JSE-listed EPE Capital Partners and Ethos Private Equity.

Following the end of its financial year, Brait disposed of its investment in DGB (Douglas Green Bellingham) for R470 million and its stake in Iceland Foods to the founder and management team of the UK supermarket group for £115 million. It had already received the initial tranches from both disposals. It also benefited from a R1.6 billion cash inflow from its portfolio during the year.

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