Trustco Group, an investment holding firm majority-owned by Namibian billionaire Quinton van Rooyen and his family, has announced plans to issue new shares to the US fund Riskowitz Value Fund LP (RVF) in exchange for an equity investment of up to NAD950 million ($50 million). It represents a strategic collaboration and a large monetary influx into Trustco.
In a recent JSE announcement, Trustco explained its intention to issue fresh shares to RVF via an option, bolstering RVF’s position as a significant anchor investor with a cash injection of up to $50 million. This investment is likely to speed Trustco’s ongoing value-creation measures, such as share buybacks and dividend payments.
As part of the arrangement, Trustco plans to grow its equity investment in Legal Shield Holdings (LSH) by acquiring an additional 11.35 percent from RVF, bringing its total stake to 91.35 percent.
LSH is the parent business of Trustco Life and Trustco Insurance, which possess Namibian long-term and short-term insurance licenses, respectively. Notably, LSH served as the holding company for Constantia Insurance in South Africa, which was liquidated by the Prudential Authority in 2022.
Trustco advises that the success of the transaction with RVF could have a significant influence on its share price. On January 2, 2024, Trustco’s shares closed at R0.50 ($0.026) on the Johannesburg Stock Exchange (JSE).
Trustco Group, which is largely run by the van Rooyen family, has a major ownership share of 63.94 percent. This huge ownership, comprising 1,004,000,060 ordinary shares, places van Rooyen among Namibia’s wealthiest individuals.
Trustco reported a 37% decrease in net asset value per share (NAVPS) to NAD1.17 ($0.0616) for the fiscal year ending August 31, 2022, compared to NAD1.86 ($0.098). Despite the drop, Trustco’s directors underlined that the company ended the year on “solid financial footing” with NAD1.15 billion ($60.62 million) in shareholder equity.
Trustco’s extensive investment portfolio, valued at NAD3.1 billion ($163.4 million) as of August 31, spans several industries, including insurance, real estate, banking, microfinance, education, and mining.
However, over the fiscal year, the portfolio’s valuations declined, owing principally to an 11.68 percent increase in discount rates.
Despite the hurdles, estimates imply a likely decrease in discount rates, indicating at a reversal in valuation declines in the next years. Trustco remains pleased about RVF’s strategic investment and the potential positive impact on its current projects.