Trustco Group Holdings Limited yesterday stated it has entered into an agreement to buy back a significant block of publicly-traded shares on the Johannesburg Stock Exchange from the University of Notre Dame du Lac (Notre Dame), for US$5 million (over N$90 million) in cash. The transaction will enable Trustco to increase its share in key investees Legal Shield Holdings and Trustco Resources.
In terms of the agreement, Trustco will repurchase 120.5 million of its shares from Notre Dame, representing 12.8% of total shares in issue. “These repurchased Trustco shares will be cancelled by the company to enhance shareholder value, whilst the repurchase remains in line with the company’s longstanding policy of buybacks when shares trade at a discount to their intrinsic value. As of 31 August 2023, Trustco’s audited net asset value per share stood at 117 Namibian cents,” read a Trustco statement.
“At Trustco, we firmly believe that the market has significantly undervalued our shares, relative to the true potential of our assets and future growth prospects,” said Floors Abrahams, Group Financial Director of Trustco. “This share repurchase allows us to capitalise on that disconnect by acquiring equity at a substantial discount, which will immediately boost investor returns,” he added.
According to yesterday’s statement, Trustco will also acquire an additional 8.65% equity interest in Legal Shield Holdings, which hosts the group’s insurance operations and real estate portfolio.
This includes Trustco Insurance Limited, Trustco Life Limited, and a real estate portfolio spanning over 2 400
sellable hectares of real estate positioned across Namibia. “Trustco’s real estate portfolio has demonstrated its value-generating prowess, generating cash in excess of N$934 million since 2011. Notably, the current average selling price for the portfolio stands at
N$1 800 per square metre, underscoring
the immense potential for capital appreciation and revenue growth within this asset class. This vast land bank presents an unparalleled opportunity, with the potential for over 26 000 mixed-use erven to be developed. The real estate portfolio has established a proven track record, successfully servicing more than 1 106 erven across all its developments over the past decade,” they stated.
In addition, Trustco aims to purchase a 0.7% stake in Trustco Resources, its mining portfolio, which it stated has recently released promising diamond resource estimates.
“The Meya River Kimberlite Dyke in West Africa, with an estimated in-situ value of US$763 million, represents a significant opportunity for value-creation. This estimate covers only 2.8km of the dyke’s strike length, which represents less
than 5% of the total combined strike lengths of the kimberlite domains within Meya Mining’s licensed area. Notably, in November 2017, the Meya Prosperity Diamond, the 29th-largest diamond at the time, was unearthed at this site and subsequently sold for US$16.5 million,” Trustco stated. Trustco emphasised that the proposed transaction remains subject to regulatory approvals. “The repurchase transaction aligns with Trustco’s strategy to increase net asset value on a per share basis and simplify its investment portfolio. Trustco is thus positioned for its planned US$100 million capital raise in the US markets that is set to create significant future value for shareholders,” the company stated.