Johann Rupert’s Classified Empire: Remgro, Richemont and Reinet

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There is little doubt about Johann Rupert’s ability as a businessman. Business acumen runs in the Rupert’s blood; his father Anton founded the first Rembrandt Group in the early 1940s. Over 80 years later, the Rembrandt Group has evolved into three different investment vehicles: Remgro, Richemont and Reinet. Together, the companies are worth more than a trillion rand, with each vehicle harboring different interests. Remgro is the investment holding company, which has invested primarily in financial services business, with the company moving towards more technology-focused investments over the past 12-18 months. This is due to the fundamental change in lifestyle resulting from the pandemic. Reinet’s main investments are its holdings in British American Tobacco and UK unlisted financial services provider Pension Insurance Corp, which together constitute over 80% of the portfolio. Finally, the Swiss luxury goods company Richemont is the largest of the three – by far – with a total value of over 900 billion rand (Remgro: 70 billion rand; Reinet: around 55 billion rand).

Since Rembrandt’s international assets split into Richemont years ago – home to several of the most beloved fashion brands, including Cartier, Montblanc and Peter Millar – it has achieved a compound annual growth rate of around 20% in the world. over the past 15 years. R100,000 invested in Rupert’s international asset portfolio would have brought in around R14 million since unbundling, which is an incredible return for the time. The company has successfully entered lucrative markets in Asia, and the industry as a whole is known to be defensive. in nature, which is somewhat counterintuitive. Luxury as a defensive industry in times of economic downturn? History tells us. Sales of luxury goods have exploded following the Covid-19 pandemic. Richemont’s share price has gained 75% in the past year, adding more than R350 billion in value. Rupert’s 9.1% stake in Richemont is the main source of his wealth. The value of its 9.1% stake is approximately R80 billion.

Reinet consists primarily of two main assets: its 2.44% stake in British American Tobacco (BAT) and 49% in the British financial services company Pension Insurance Corp. It is an investment holding company. As with other holding structures, Reinet struggled to reduce the discount between its net asset value per share and its market price, a discount of around 40%. Reinet slowly began to sell his stake in BAT over the years, with his stake accounting for 80% of the value of the funds when Reinet was initially listed. Pension Insurance Corp has become the fund’s largest asset, with BAT accounting for 85% of the company’s total assets. Analysts criticized the lack of diversification and high management fees as the reasons for the large discount in the share price to the fund’s net assets. Walter Aylett, one of South Africa’s top asset managers, was recently in the BizNews Power Hour, describing Reinet as Johann Rupert’s “stay rich” fund. Reinet is the most important position in all of Aylett and Co’s investment funds. He describes the investment as asymmetric in nature with a big advantage. Johann Rupert’s 25% stake in Reinet adds around R14 billion to his net worth.

Remgro is a diversified investment holding company whose interests consist primarily of investments in the healthcare, consumer products, financial services, infrastructure, industry and media sectors. Although the company has exposure to rand-hedge, it is primarily a diverse play on the South African economy. Remgro owns a mix of listed and unlisted assets. Again, as we have mentioned, holding structures such as Remgro and Reinet have an ongoing problem of trading with large discounts to their net assets. Remgro’s listed investments include Mediclinic, Distell, RCL Foods, RMI and FirstRand. She began to invest aggressively in more tech-oriented investments, such as Community Investment Ventures Holding (CIVH), the holding company of Dark Fiber Africa and Vumatel. CIVH was valued at R27 billion in the latest annual report from Remgro, in which the company has a 55% stake. Kokkie Kooyman said Remgro is seen as a visionary, slowly moving away from financial services towards technology sectors due to his shift in perspective following fundamental changes in consumer trends after Covid-19. Rupert’s 7% stake in Remgro adds around R5 billion to his net worth.

Among the three vehicles listed, Johann Rupert holds a combined stake of R100 billion. To put this in perspective, a company of this size would enter the JSE Top 40. Together, companies provide diversification, with each vehicle’s profit and risk drivers different from each other. Given Rupert’s success over the years, it would be difficult to bet against one of South Africa’s biggest businessmen in the future.

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