Investment strategy

Stellar Capital is an investment company focused on investing primarily in unlisted assets, working with management teams to create market leading businesses and ultimately realising and delivering value to its shareholders. Stellar Capital believes that it has a competitive advantage through the strength of its network providing access to proprietary deal flow, coupled with a management and investment team with demonstrable track record in building value in businesses and generating exceptional shareholder return.


Investment strategy

The investment strategy of the Company will entail the following:

  • to grow a portfolio of equity, debt and hybrid securities, unconstrained by any particular market or sector, in listed and unlisted businesses, that will generate above average returns on capital for the Company’s shareholders;
  • to apply a hands-on investment approach, in order to assist management teams and to provide strategic input, without assuming direct operational responsibility;
  • to apply a flexible investment approach relating to the timing and duration of investments;
  • to actively engage with investee companies in relation to their corporate activity and other strategic initiatives; and
  • to leverage the existing network of Manco to create a unique, well-diversified investment vehicle which will be an attractive proposition for institutional investors.

Investment focus

Stellar Capital has been established to:

  • hold a combination of strategic equity instrument investments as its primary objective and, as secondary objective and usually for limited periods, controlling equity investments;
  • earn high levels of current income from dividends and a credit investment portfolio comprising debt and hybrid securities which supports sustainable free cash flow and dividend yield; and
  • opportunistically utilise the Company’s balance sheet to generate fees for shareholders through corporate finance strategies in support of investee companies or on a standalone basis.

Sectors and geographies

Stellar Capital will hold investments in three core areas:

  • Industrials and Support Services;
  • Financials; and
  • Disruptive opportunities across all markets. This may comprise an investment in any business (typically technology related) in the process of creating a new market or value network with the potential to displace established market leaders.

Stellar Capital will initially invest in South African based investments with focused international operations, whilst retaining the ability to over time invest in foreign based investments which may or may not have established operations within South Africa.

Other parameters

Stellar Capital will:

  • seek to invest in growth and early-maturity stage businesses in which management teams remain equity incentivised throughout the investment life cycle;
  • establish primarily large minority equity holdings, but retain the ability to hold majority holdings, particularly during the initial stage of the investment;
  • not retain operational management of its investees for prolonged periods, but will hold the ability do so during the initial stage of the investment or as is deemed necessary from time to time;
  • seek board representation within its investees’ reporting structures without establishing board control for prolonged periods of the investment cycle;
  • hold investments without pre-determined realisation periods; and
  • exit investments in the event of:
    • protracted periods of under-performance relative to criteria set by management depending on the nature, sector and stage of the investments;
    • receipt of unsolicited offers at materially higher values than attributed by Stellar Capital; or
    • availability of alternative investments with substantially superior returns.

Growth targets

Stellar Capital will seek to deliver total shareholder return in the form of NAV growth and shareholder distributions (where applicable) of at least 15% and more per annum over each rolling 3 year period target.

Stellar Capital will retain a discretionary dividend policy until it has reached sufficient maturity and stability in earnings from underlying investments. Cash will be retained for growth in the initial stages of development.

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