Our opinion on the current state of EPE

Nov 17, 2023

Ethos Capital Partners (EPE) is a private equity fund (PEF), incorporated in Mauritius, which invests into unlisted companies for long-term capital appreciation on behalf of its investors. Like most investment holding companies, Ethos trades at a significant discount to its net asset value (NAV). Fifty-six percent of their assets are in South Africa and 39% in the rest of Africa. It has stakes in Tymebank, Ster Kinekor and Brait. The risk in this company appears to be minimal since it does not invest a significant proportion of its funds in any one investment and its investments have performed well in the circumstances. It does not pay dividends, so the investor has to look for a capital gain. In its results for the six months to 31st December 2022 the company reported attributable sales up 15% and net asset value (NAV) up 1,3% at 1080c per share (using Brait's NAV). The company said, "The portfolio achieved an 8% return (R148 million) over the period, predominantly driven by increases in Optasia following the partial sale transaction, and strong performances from Synerlytic and Gammatak". In a voluntary update fro the 31st March 2023 the company reported NAV of 861c per share - up 1,2% in the quarter. The company said, "...the Board approved a share buyback program that commenced towards the end of March 2023 and was completed in May 2023. In aggregate, Ethos Capital purchased R20 million through this program at an average price of R5.53 per share". On 15th November 2023 the company reported "The NAVPS of Ethos Capital, including the Brait PLC ("Brait") investment at its share price, decreased by 4.3% in the quarter to 30 September 2023, from R8.56 to R8.19". The share is well-traded with an average of over R560 000 worth of shares changing hands every day. It made a low at 370c on 25th March 2020 and has since started to move up as its investments recover from COVID-19 restrictions and more recently from the sell-off due to Ukraine crisis. In our opinion this should turn out to be a good investment at current levels where it is still trading well below its NAV - depending on the progress of the current trend in world markets.