Manager Research

Recently, RMI Investment Manager (RMI) concluded a transaction with Royal Bafokeng Holdings (RBH) whereby RBH purchased an effective 11.4% stake in Truffle via RMI. RBH already has a 2.1% stake in Truffle through RMI’s listed entity RMI Holdings. This transaction will bring RBH’s effective interest in Truffle to 13.5%.

Further to this, an additional 4.5% of Truffle’s issued share capital was purchased from the company’s founding shareholders, Louis van der Merwe and Charles Booth, by current staff.

As a result of the transaction, total black ownership in Truffle will increase to 23.8% from 11.3% at the beginning of the year. In addition, the business has also achieved a Level 2 BEE rating from a previous rating of Level 5, this became effective in September.

Following the transaction, total staff, including ex-staff, have a 62% shareholding in Truffle. This has decreased from 71% in November last year. However, it is important to note that this decrease has been driven by ex-staff members selling their shares, while current staff ownership in the business has increased. Outside shareholders, which includes RMI and RBH, now own 38% of the business.

We have historically been quite positive about the high staff ownership levels at Truffle, as they tend to enable long-term thinking and align the team and investors’ incentives. In addition, this is not the first time that the business has offered shares to the next generation to enable succession and continuity in the investment team. As a result, we view the further sale of shares to current staff by the company’s founding shareholders as a positive. In addition, we feel that it is positive from a business continuity and growth perspective that they have sought to improve their BEE credentials.

RBH is a private investment company with total assets under management of R29bn in both listed and unlisted assets. The company’s portfolio is diversified across infrastructure, financial services and consumers goods, resources and other investments. One of their investments is in Royal Investment Managers which is also partly owned by RMI and is invested in Sesfikile Capital, another investment manager that we publish ratings on.

Overall, we retain the current ratings on the Truffle funds and we provide an overview of our ratings below.