Johannesburg - Coronation Fund Managers makes its intention clear that it plans to scale back its shareholding on ADvTECH, by reducing its stake to 18.9 percent.
ADvTECH is the private sector leader in education and outsourcing in the country and Coronation has more than 25 percent in the company. ADvTECH did not comment on Coronation’s intention but focused on their recent success.
“While we are not in a position to comment on behalf of any shareholder on their particular investment decision, Coronation still own a significant share in ADvTECH,” the company said.
“It is also worth highlighting our share price trend, which has seen an increase of 11 percent over the past six months and almost 40 percent over the past 12 months.”
Read also: ADvTECH ready to hit acquisition trail
ADvTECH traded lower on the JSE yesterday and its share price lost more than 1 percent, before paring its losses to close 0.14 percent down at R13.95 a share yesterday.
Profits
Nolwandle Mthombeni, an equity analyst at Mergence Investment Managers, said Coronation’s plan to reduce its shareholding in the company might be motivated by the realisation of profits by Coronation in ADvTECH.
“Coronation has been the majority shareholder in ADvTECH for over five years. As at 2010 year end they owned 17.7 percent and as at 2015 year end they held 25.1 percent.
“This shows they took a very long-term view on the company and it paid off as the capital return has been over 200 percent over last five years. And as such significantly outperforming the ALSI in the comparative period,” she said.
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Mthombeni said in reducing its holding, Coronation had simply realised some of those profits and it was justifiable as the valuation was quite full at these levels.
“This is evident by the share pricing moving sideways for the last few months,” she said.
Roy Douglas, the chief executive of ADvTECH, said during the annual presentation in March where the company posted a 75 percent rise in operating profit, that it had been able to restructure its balance sheet and had enough capital to fund its future projects.
Coronation is not exiting ADvTECH but is planning to reduce its exposure. Mthombeni said: “As a result it is likely that Coronation will continue having a major shareholding in ADvTECH. What does this mean for ADvTECH? Key things to consider would be corporate governance, liquidity and share price reaction.”
Coronation shares gained 3.24 percent to close at R78.47.
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