Feeling flush: big change in pipeline for Rex Trueform
Fashion retailer to diversify with stake in SA Water Works
Fashion retailer Rex Trueform – which is controlled by a consortium led by empowerment doyen Marcel Golding – looks set for a major strategic shift.
On Friday, the company – which owns the Queenspark fashion chain as well as properties based in Cape Town’s revamped Salt River precinct – announced it would snag a 33.78% stake in SA Water Works in exchange for funding of R81m.
According to a statement sent to shareholders, SA Water Works intends using the funding from Rex Trueform – as well as another R41m provided by co-investor Mergence Investment Managers – to acquire a 73.4% stake in Sembcorp Siza Water.
Sembcorp Siza manages a water concession business in the municipal boundaries of the Ilembe district municipality and surrounding areas in Kwazulu-Natal.
Rextru said the company had been looking for opportunities to diversify. “The acquisition of the stake in SA Water Works will allow us commence the process of diversification.”
There has been persistent speculation that cash-flush and conservatively managed Rex Trueform would change strategic tack after Golding – formerly an executive at Hosken Consolidated Investments (HCI) – and consortium partner Hugh Roberts took a commanding stake in the business.
Golding and Roberts, a former fund manager, also have control of African & Overseas Enterprises, the pyramid holding company of Rex Trueform.
Golding has previously shown a penchant for water-aligned assets, and has been involved in struggling construction firm Esor, which operates specialist pipe services and water-reticulation businesses.
With Esor seemingly heading for business rescue, there may be an opportunity for Rex Trueform to acquire selected assets in the water segment.
Sembcorp Siza provides water and water services to residential, industrial and commercial consumers, and generated net profits of R23m in its last financial year.
Rex Trueform, a tightly held company, is not widely watched by investors. But sources said it probably made sense to use its strong balance sheet – with cash-on-hand of R69m – to diversify the operational base.
Golding is an experienced dealmaker. He was, along with trade union comrade Johnny Copelyn, a co-founder of a new-look HCI in the mid-1990s. HCI was a left-for-dead holding company for insurance assets, but was transformed by smart dealmaking into an empowerment powerhouse with valuable assets in gaming, media, transport, property, mining and light industry.
Golding left HCI in 2014 after strategic differences with other board members at key asset e.tv.
Golding is also a major shareholder in black-owned financial services business Vunani and is believed to own wide-ranging unlisted investments.