Wiese holds main stake in ConvergeNet
CAPE TOWN — Retail tycoon Christo Wiese has emerged as the anchor shareholder at former technology hub ConvergeNet — which is to be revamped into a diversified investment company — after detailing scrip-funded transactions on Monday.
Dr Wiese is best known as an investor in retail ventures such as Pepkor and Shoprite, and also holds substantial positions in investment giant Brait, industrial services conglomerate Invicta Holdings and mining group Pallinghurst Resources.
Dr Wiese’s additional investment in ConvergeNet — where he has been a small shareholder for some years — pales in comparison with his other listed investments, which are estimated to be worth about R60bn.
Dr Wiese could not be reached for comment on Monday. But a well-known investor — who asked not to be named — suggested Dr Wiese, now in his early 70s, simply enjoyed the thrill of the deal.
“This deal won’t move the needle for him … it’s like he’s addicted to deal-making.”
Dr Wiese’s renewed interest in ConvergeNet stems mainly from a transaction where he sold his significant minority stake in JSE-listed Digicore (a vehicle-tracking specialist) to ConvergeNet as part of a R109m scrip-funded transaction. Dr Wiese also sold his noncore investments in junior mining businesses Mine Restoration Services and Goliath Gold to ConvergeNet — also in exchange for scrip.
These transactions coupled with a proposed private placement of ConvergeNet shares at 200c per share would give Dr Wiese a stake of between 28.26% and 33.65% of the new-look investment vehicle.
Market sources say Dr Wiese is essentially backing ConvergeNet to be transformed by corporate financier Charles Pettit, better known for his successful transformation of the ailing SA French into the industrious and acquisitive industrial services business Torre.
Mr Pettit — a nonexecutive at ConvergeNet — has been working hard behind the scenes at restructuring the business.
Momentum Asset Managers and Investec — which both followed Mr Pettit in his endeavours at Torre — will also participate in the ConvergeNet private placement.
Momentum Asset Management portfolio manager Shawn Stockigt said ConvergeNet offered a good opportunity at a fair price. ConvergeNet is issuing shares in the private placement at net asset value.
Mr Stockigt added: “It’s a small investment for us. But we are essentially backing Charles (Pettit) again, and hoping to capitalise on the deal flows that a seasoned investor like Christo Wiese could bring.”
ConvergeNet will initially revolve mainly around new investments in electronics group Tellumat and Digicore. There is speculation that the small tilt at financial services via Praxis could be broadened considerably. A market watcher speculated that AfrAsia — the Mauritius-based corporate financier formerly headed by Mr Pettit — could add some intrigue to ConvergeNet’s financial services mix at a later stage.
Mr Pettit confirmed the company intended building three focus areas in industrial operations, technology and financing.
ConvergeNet’s 30% stake in Tellumat was achieved after an asset-for-equity swap in which ConvergeNet sold its 100% stakes in Contract Kitting and SCS to Tellumat for R95m and R5m respectively.
Contract Kitting is an electronics engineering company specialising in the telecoms industry — specifically direct current power, operations management, cooling, hybrid power, cable assemblies and harnesses, as well as shelter solutions.
SCS is an information technology firm that consults and designs infrastructure projects and installations.
Both businesses fit with Tellumat, which is involved in telecommunications (wireless and enterprise communication arenas), defence (radar, navigational, avionics and naval systems) as well as contract manufacturing to a range of customers in the electronics industry.
Praxis is least significant, having been acquired for a nominal R1.