Reinet’s value declines on BAT and Covid-19 volatility


Reinet’s value declines on BAT and Covid-19 volatility

Published Date: 2020-06-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Reinet’s value declines on BAT and Covid-19 volatility

The investment group says the decrease in its net asset value from January to March topped one billion euros.

A decline in British American Tobacco's (BAT) share price last year has weighed on Reinet's net asset value (NAV), as has the Covid-19 pandemic. However, the investment group is reducing its exposure to the tobacco giant and reinvesting the proceeds in new investments as it diversifies its portfolio.

Reinet was spun out of Richemont in 2008 and its biggest investment remains the stake it inherited in BAT. Other holdings include Pension Insurance Corporation Group and a number of listed and unlisted private equity investments. A decline in BAT's share price over the last four years has reduced its dominance in Reinet's portfolio, while other investments including Pension Insurance Corporation have gained in value.

The investment group committed €526 million to new and existing investments over the course of the year to end-March and invested a further €350 million, including €316 million into Pension Insurance Corporation after shareholders approved a revision to its investment guidelines. It sold 10 million BAT shares, realising proceeds of €392 million.

Its NAV at the end of March stood at €4.4 billion, down €427 million or 8.8% from a year earlier, due to a decline in the share price of BAT from £31.94 to £27.57 and a decrease in the carrying value of Pension Insurance Corporation after adjusting for the recent additional investment. Offsetting these decreases were dividends of €146 million from BAT and increases in the estimated fair value of certain investments including derivative assets. It spent €105 million as part of the share buyback programmes.

Despite last year's decline, Reinet said its NAV still reflected a compound return of 8.7% a year in euro terms since March 2009, including dividends paid. On a per share basis, it declined 5.6% to €23.89 last year, with fewer shares in issue as a result of the group's share buyback programme. It has proposed a divided of €0.19.

The company's shares fell 0.7% to R275 on Friday.

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