In August 2005, the listing of Brait III portfolio
company, Net 1 on the Nasdaq realised 20% of the Brait III holding
in Net 1 and returned approximately 1,4 times capital invested
in Net 1. Brait III continues to hold 80% of its Net 1 holding,
which is currently trading at over eight times invested capital
with a market value of over US$300 million for Brait III's remaining
holding. This is the first Nasdaq listing to be sponsored by
a South African private equity firm. The bookrunners, JP Morgan
and Morgan Stanley, labelled it a significant success, being
10 times oversubscribed and priced at US$22 per share, outside
the cover range of US$18 to US$20 per share. The share has traded
up post-listing to a range of US$30 to US$32.
Other highlights during the financial year include a number
of Brait II exits such as Shoe City, Prime Cure and Unispan.
The local Brait II vehicle (SAPET I) is now fully realised and
Brait believes this to be the second fully realised closed end
private equity fund using third-party capital in the history
of the local private equity market. SAPET I returned a gross
rand IRR of approximately 58%. The offshore Brait II fund (SACGF)
needs one further realisation before it will be fully realised
and wound up.
The Reclamation Group, a Brait III portfolio company, realisation
in early 2006, through a leveraged recapitalisation, was particularly
innovative and another South African first. The company issued
a Eurobond which enabled management to purchase the company
back from Brait III and other shareholders. The Reclamation
Group, an environmental services group focused on the secondary
metals market, with developing operations in waste paper, glass,
rubber and plastic recycling, proved to be a highly successful
investment for Brait III returning over five times the original
investment and an IRR greater than 40%. Brait believes the company
has a bright future.
Brait continues to apply considerable resources to enhancing
strategic plans of existing portfolio companies. Brait III portfolio
companies Net I, Pepkor, LogicalOptions and Wilderness have
all performed exceptionally well at an operational level during
the course of the year. |
