DURBAN - Reinet Investments’ net asset value (NAV) declined 5.3percent for the quarter to end June compared to the prior quarter, the group attributing the fall to a decrease in the fair value of certain investments like British American Tobacco (BAT) and Pension Insurance Corporation Group.
The group’s NAV for the quarter declined to 4.86billion (R75.77bn), from 5.13bn in March.
However, the group said the 38m dividend from BAT helped to cushion the decline.
Reinet holds 68.1million shares in BAT.
However, BAT has declined by 7.28percent on the London Stock Exchange (LSE) to £38.30 (R669.74) at the end of June, down from £41.31 at the end of March.
“The investment in BAT remains Reinet’s single largest investment position and is kept under constant review, considering the company's performance, the industry outlook, cash flows from dividends, stock market performance, volatility and liquidity,” Reinet said.
Reinet’s investment in BAT amounted to 2.95bn at the end of June, representing 60.7percent of its net asset value. At the end of March the investment amounted to 3.20bn.
Reinet has also invested in the unlisted Pension Insurance Corporation Group.
In the current quarter, Reinet acquired additional shares from the corporation for £6.3million, pushing its total shareholding in the group to 43.72percent.
Reinet said investment in Pension Corporation was estimated at 1.24bn at the end of June, down from 1.31bn at the end of March.
“The decrease in estimated fair value at June 30 reflects a decrease in Pension Corporation’s estimated embedded value, decreases in comparable valuation multiples being applied by the market in valuing listed companies in the UK insurance sector and the weakening of sterling against the euro in the quarter,” Reinet said.
However, Reinet still managed to report strong cash and liquid funds though it declined to 287m, down from 322m at the end of June.
Reinet ploughed 86m in underlying investments during the quarter, including 57m in RLG Real Estate Partners (RLG).
RLG invests in and develops real estate properties, including luxury brand retail developments situated in prime locations throughout the world.
During the quarter the group paid management fees of 23m, loans and interest amounted to 7m and distributions from investments of 39m and other expenses amounting to 2m.