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Investment group Reinet Investments (REI) says its net asset value (NAV) rose 8% in the quarter ended June – the first quarter – to EUR3.943bn.

Its NAV per share rose to EUR20.12 from EUR18.62 in the March quarter. In rand terms‚ its NAV rose to R40.769bn from R37.323bn and NAV per share to R208.03 from R190.45.

British American Tobacco’s fair value increased by EUR199m during the quarter. Reinet remains one of the largest shareholders in BAT‚ holding some 84 million shares representing 4.3% of BAT’s capital.

At end-June 2012‚ the value of the investment in BAT in the balance sheet of Reinet was EUR3.389bn‚ being 86% of Reinet’s NAV.

Reinet received a dividend from BAT during the period amounting to EUR92m.

Reinet holds cash on short-term deposit principally in European banks. It also holds GBP119m (EUR147m) in a sterling liquidity fund and EUR20m in a euro-denominated liquidity fund. Both funds hold highly rated short-term commercial paper and have short-term AAA credit ratings.

Reinet has invested both in the Trilantic management companies and as a partner in the underlying funds. As at June 30 2012‚ Reinet and its 20% minority partners in Trilantic had invested the equivalent of EUR132m‚ net of capital repayments‚ in the initial Trilantic management company investment and the funds under Trilantic management.

The investment in Trilantic is carried at the estimated fair value of EUR177m‚ based on recent valuations prepared by Trilantic. Of the EUR177m‚ some EUR35m is attributable to Reinet’s partners.

At June 30 2012 Reinet had remaining commitments of EUR46m to invest in these funds‚ after taking into account the amounts payable by the minority partners.

In May 2012‚ Reinet approved a commitment of EUR79m to Trilantic in respect of the new Trilantic Capital Partners V (North America) LP. Under the terms of the original strategic agreement‚ no management fee or carried interest will be payable to Trilantic in respect of the additional commitment.

Reinet has co-invested with partners to acquire interests in real estate development projects‚ usually properties where infrastructure services have been laid but where construction of properties has not yet begun. It has also invested in mortgage debt on such developments and in specific properties. The investments are principally in Florida‚ Colorado and North and South Carolina.

At June 30 2012‚ Reinet had invested a total of EUR71m in these projects. The investment is carried at the estimated fair value of EUR94m (March 2012: EUR95m)‚ of which EUR75m is attributable to Reinet and EUR19m to its partners.

Reinet is committed to invest a further EUR7m to acquire further mortgage debt‚ to fund development projects and acquire additional land and properties.

It has co-invested with the 36 South management team in the 36 South fund management and distribution companies. It is also an investor in the funds under management. These funds are established through an Irish-registered investment fund 36 South Funds plc.

36 South is an absolute return fund manager which specialises in managing global macro/volatility funds. The fund’s management philosophy is to invest when market estimates of volatility are mispriced. The volatility may apply to a wide range of underlying asset classes‚ ranging from currencies and interest rates to equities.

Reinet has invested its full commitment of EUR88m in 36 South. Of this‚ EUR15m represented the initial investment in and loans to the jointly held fund management activities; the balance of EUR73m being Reinets investment in the funds under management. During the year ended March 31 2012‚ EUR3m of the loan was repaid.

The investment in 36 South Funds plc is carried at its fair value of EUR87m at June 30 2012 (March 2012: EUR78m)‚ together with the fair value of the loan of EUR12m‚ for a total of EUR99m.

Reinet is also an investor in an entity that extracts diamonds from the waste tailings from mining operations which began over a century ago. The tailings are located at Jagersfontein in South Africa.

Developments in terms of gemstone extraction technology since the mines were first excavated mean there is now the potential to recover stones that were previously treated as waste. In addition‚ Reinet has invested in a separate company that owns assets pertaining to mining rights and related activities to source diamonds on another property in SA.

As anticipated at the time of making the investment‚ Reinet has entered into agreements to sell a substantial part of its holdings in these projects to third parties‚ including local black economic empowerment organisations. The sale of 42% of the holdings in Jagersfontein was completed in the quarter under review. However‚ other contracts are still subject to certain regulatory approvals being obtained and conditions precedent being met. Upon completion of the transactions‚ Reinet will have an equity interest of between 45% and 49% in each of the ventures. - I-Net Bridge