TSOGO Sun Holdings in March resolved to split its gaming and hotel divisions. Supplied
JOHANNESBURG - Tsogo Sun Holdings plunged 18.7percent on the JSE yesterday as it unbundled its hotel business.

The share started the day at R20.31 and tumbled to a close of R16.51, with a market cap of R17.52billion as Tsogo Sun Hotels (THL) made its debut on the bourse yesterday at R2.70 a share.

THL’s shares rallied to close at R4, valuing the company at R4.2bn.

Tsogo Sun Hotel chief executive Marcel von Aulock said yesterday: “Today’s listing represents an exciting new era for all of our stakeholders - from shareholders to employees - and we look forward to continuing to serve our guests with the dedication and excellence that they have come to expect from a company such as ours.”

The listing date was also significant, as it coincided with the group’s 50th anniversary. Tsogo Sun Holdings in March resolved to split its gaming and hotel divisions.

Tsogo’s hotel interests were to be housed under one holding company, THL, while Tsogo Sun would house the gaming division - being casino and alternative gaming operations - and renamed Tsogo Sun Gaming.

Tsogo Sun Holdings now only houses the group’s casino interests while THL now houses the hotel interests, with a portfolio of 110 hotels with a combined total of almost 19000 rooms.

Asief Mohamed, the chief investment officer of Aeon Asset Management, said yesterday the reason for the decline in price was due to the unbundling and separate listing of THL.

”We believe the unbundling was beneficial for the group as a whole, due to concentration on core businesses, whilst attracting investors who otherwise would not invest due to the so called ‘sin’ stocks associated with gaming,” Mohamed said.

Tsogo Sun Holdings’ controlling stake in Hospitality Property Fund is held by THL. The hotel division also holds the Tsogo Sun group’s minority investment in RBH Hotels UK and International Hotel Properties, based in the UK.

The group said earlier in the year that given that the gaming and hotel divisions operated in distinctly different markets and services different customers “there are limited opportunities to leverage synergies within the group as a whole”.

The separation was aimed at giving shareholders a greater investment choice and the ability to manage their exposure to gaming and hotel operations respectively. It is also envisaged that the separate listing of THL would provide shareholders with transparent disclosure relating to the operations of the hotel division and allow for the valuation of THL without discounting for gaming-related regulatory risks.

Donna Nemer, a director of capital markets and group strategy at the JSE, said the listing was an opportunity for Tsogo Sun Hotels to unlock a wealth of potential and capital for its investors on one of the best platforms globally for emerging markets.

For the 12 months ended March 2019, Tsogo Sun reported total income up 18percent at R11.8billion. Profit after tax fell 24.8 percent to R1.6bn, with adjusted headline earnings per share falling 3percent to 106 cents.

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