Peregrine considering a split to bolster profits
Peregrine Holdings Ltd., which operates South Africa’s oldest hedge fund and also owns half of advisory business Java Capital, is contemplating splitting itself to create a new investment firm, by using profits from its stockbroking and wealth-management units.
Jonathan Hertz (pictured), Peregrine CEO, told Bloomberg that the company has some R1.5 billion of surplus cash on its balance sheet which could be used to start the venture. The company is considering whether to return the excess money to shareholders either directly or in the form of an investment vehicle given to shareholders that they can own, Hertz said.
According to Hertz, should the board decide to separate the excess capital from the company's divisions, the operating business would likely pay out almost all of its profit in dividends - less any required working capital increases. The new investment vehicle would be able to take on additional capital, hold about 50 percent of its assets offshore, and possibly trade at a discount to its net asset value, Hertz added.
44-year-old Hertz is preparing to leave his CEO post on 30 June, reportedly to spend more time growing Alpha Capital Management, a Bermuda-based investment-management company he founded in 2008. It is not yet clear who might succeed him.