Ethos Capital lifts interim NAV
JSE-listed Ethos Capital’s net asset value (NAV) increased to R1.9-billion during the six months ended December 31.
The company said in a statement on Monday that it increased its underlying exposure to 11 companies, with invested capital equal to 39% of NAV.
The company reiterated its long-term strategy of fully investing NAV, while retaining sufficient liquidity to meet commitments.
"Across the various funds, Ethos is in exclusive discussions on seven investments. Two have been signed and are subject only to regulatory approval. A further two investments are well progressed and have signed term sheets," the company said.
Ethos, meanwhile, said underlying attributable earnings before interest, taxes, depreciation and amortisation growth across the various funds' portfolios over the past 12 months had been relatively modest.
The Ethos fund teams, together with the in-house value-add capability, have spent significant time and effort to ensure that each portfolio company is optimally positioned, both strategically and operationally, to benefit from the turnaround in the economic cycle.
“With economic prospects likely to improve in the medium term, we believe the value-accretive strategies implemented at portfolio companies should start delivering accelerated growth,” the company said.
Gross domestic product growth remained subdued, consumer confidence was soft and policy and political uncertainty severely impacted companies' strategic deployment of capital and investor confidence.
“South Africa's longer-term outlook has, however, improved significantly of late. Political changes, both within the African National Congress and also in national government with President Cyril Ramaphosa taking over as South Africa's new President in February, are likely to result in a significant uplift in both consumer and business confidence.”
Going forward, Ethos’ pipeline of opportunities across all of the funds remains very strong.
While there is improvement in the macroeconomic environment, it is important that the funds continue to invest selectively in assets that have a robust and defensible business case.
Across the various funds, Ethos is in discussions on seven investments.
While there can be no guarantee that all of these transactions will close, Ethos remains confident that it will be able to close on the majority of these investments.
The amount of capital required by Ethos Capital into these transactions, should the funds be successful in closing all of them, would be about R400-million.”