Africa’s second-richest man Johann Rupert walks away from major acquisition despite €5.5 billion cash reserve

South African billionaire Johann Rupert’s investment company Reinet has revived its €500 million ($5.8 billion) share buyback programme after shelving a major acquisition it had spent months evaluating, leaving investors wondering how it will deploy one of the largest cash reserves among listed investment firms.

• Johann Rupert’s investment vehicle Reinet has abandoned plans for a major acquisition after months of evaluation.
• The move allows the company to restart its €500 million share buyback programme.
• The decision leaves Reinet holding one of the largest cash positions among listed investment firms after selling its two biggest assets.
• Investors are now watching whether Rupert pursues another large acquisition, returns more capital, or restructures the company.

The Luxembourg-listed company said it would not proceed with the potential investment “in the immediate future”, ending a self-imposed closed period that had prevented it from repurchasing its own shares. The decision clears the way for Reinet to resume buying back stock after weeks of inactivity.

The move comes after a dramatic reshaping of Reinet’s portfolio over the past two years.

The investment firm now holds around €5.5 billion ($6.4 billion) in cash and liquid assets following the sale of its two long-standing cornerstone investments, its stake in British American Tobacco and nearly half of Pension Insurance Corporation (PIC).

Those disposals transformed Reinet from a concentrated investment vehicle into one of Europe’s most cash-rich listed holding companies.

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The company was originally established in 2008 to hold the Rupert family’s investment in British American Tobacco after the restructuring of luxury goods giant Richemont. Over time, Pension Insurance Corporation also became one of its largest assets.

Reinet completed the sale of its 49.5% holding in Pension Insurance Corporation to Athora UK Holding earlier this year, generating almost €3.94 billion including dividends on an investment that began in 2012.

The company had previously exited British American Tobacco, ending a relationship between the Rupert family and the tobacco industry that stretched back almost 80 years.

Returning cash instead

Rather than deploying its capital into another large investment, Reinet has opted to buy back its own shares.

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The programme, announced in June, authorises the repurchase of up to 16.5 million shares, worth as much as €500 million, in several phases running until the company’s 2027 annual general meeting. The first tranche allows purchases of up to €75 million.

The company has already resumed purchases, with weekly updates showing continued buying on the Johannesburg Stock Exchange after the programme restarted.

Share buybacks are commonly used by investment companies when management believes the shares trade below their intrinsic value or when attractive acquisition opportunities are limited.

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Investors await Rupert’s next move

Reinet’s latest figures showed net asset value of about €6.6 billion ($7.7 billion) at the end of June, while net asset value per share edged higher despite the overall portfolio remaining broadly unchanged.

The company said gains from investments including TruArc Partners, Coatue funds and Prescient China funds partly offset currency movements during the quarter.

Despite restarting the buyback, the biggest question for investors remains what Rupert plans to do with the company’s sizeable cash reserve.

Earlier this year, some market analysts suggested Reinet could eventually return a significant portion of its excess cash to shareholders through a special dividend or even consider winding down the investment vehicle if it fails to identify another transformational investment.

For now, however, the company says geopolitical tensions, economic uncertainty and inflation risks continue to shape the investment environment, even though it has no direct exposure to conflict zones such as Russia, Ukraine or the Middle East through its underlying portfolio.