Reinet Investments (REI) has reported a rise in net asset value per share to Euro 18.62 for the year ended March 2012 from Euro 14.21 a year ago.
Net asset value rose 31% to Euro 3.649 billion, reflecting the strong growth in the value of Reinet's holding in British American Tobacco (BAT, BTI).
As the company is currently in an investing phase, building a broader-based equity portfolio, no dividend was proposed.
BAT's fair value increased by Euro 803 million during the year, reflecting strong growth in the underlying share price.
Chairman Johann Rupert said there was still uncertainty in global financial markets and it is impossible to predict what the outcome of the euro crisis may mean for investors.
“Against this background, Reinet will continue to invest prudently. Under the continuing uncertain economic scenario the very significant interest in British American Tobacco is an excellent protector of value for Reinet shareholders,” he said.
Reinet Investments' consolidated profit for the year amounted to Euro 865 million, reflecting net realised income of Euro 38 million and net unrealised gains of Euro 827 million.
As well as the substantial increase in the value of the holding, Reinet's interest in BAT generated dividend income of Euro 114 million and it also received the BAT final dividend for its financial year ended December 2011, which amounted to GBP 75 million.
Reinet has entered into a very significant partnership with Bill Winters and RIT Capital Partners to create Renshaw Bay, an alternative asset management and advisory firm. Reinet has invested a small amount in the firm to date but has already made a significant co-investment with its partners in the JPS Credit Opportunities Fund, which focuses on trading opportunities in credit markets.
“We expect other opportunities to follow, drawing on Mr Winters' in-depth knowledge of and excellent contacts in the banking world,” said Rupert.
Reinet has also extended its interest in the natural resources sector with the acquisition of diamond extraction rights on a property in South Africa. This will be operated by the same partners who have identified and started work on the Jagersfontein mine tailings project. In both cases, Reinet will be a minority, financial investor in the project.
“We see these investments as opportunities for Reinet to benefit from the increasing global demand for both gemstones and industrial diamonds whilst supporting the local communities,” he said.
During the year Reinet also built on its relationship with the management team of Milestone Capital, which manages funds investing primarily in established high-growth companies seeking expansion or acquisition capital in China. Milestone has a proven track record of investment in Chinese businesses, seeking out proprietary deals and applying stringent due diligence, creative structuring and proactive monitoring with a focus on value creation. In addition to its existing investment in Milestone, Reinet has committed to invest a total of $ 152 million in the Milestone China Opportunities Fund III LP, its management company and co-investment opportunities.
“We are in discussions with our colleagues at Trilantic Capital Partners to invest a further $100 million in Trilantic. As an investor in the Trilantic management companies as well as its Fund IV funds, Reinet effectively pays no management fees or carried interest on its LP investments in Trilantic funds - a valuable asset. Reinet is also entitled to share in any carried interest gains arising on the disposal of Trilantic funds' underlying investments. During the year under review, Reinet received carried interest of Euro 7 million linked to the realisation of investments held by the Trilantic funds,” he noted.
Looking ahead, Rupert said Reinet's cautious approach to diversification has proved to be a sound policy to date. BAT shares have been amongst those which offered the highest risk-adjusted returns of all European stocks over the period since Reinet was established in 2008.
“We see a number of interesting investment opportunities opening up to Reinet. In evaluating the many proposals put before us each year, we will continue to be conservative in our investment philosophy; working with partners we know and trust to build value for our shareholders over the medium to long term,” he concluded. - I-Net Bridge