Sandown Capital seeks to create long-term value for its shareholders by sourcing and holding investment opportunities which the board feels are capable over time of producing compound annual growth in excess of its minimum targeted return of 15% per annum.
Sandown Capital seeks to capitalise on its status as a permanent capital vehicle by patiently seeking out a small number of investment opportunities that are capable of producing extraordinary compound returns over time without being deterred by potential volatility or variability of returns on those investments in the shorter term. Whilst, as a listed entity, the effects of this volatility may impact the company’s income statement from time to time, the litmus test for each investment will remain its ability to provide a sustainable above-hurdle level of compound returns in order to meet the board’s strategic imperative of achieving long-term growth in NAV per share.
The current portfolio composition is effectively an inherited one, comprising the assets held by Sandown Capital and the surplus assets unbundled from the Peregrine Group. Whilst the board is comfortable that the current portfolio of hedge funds, direct property and listed property units as well as a funding stake in a South African corporate through a black economic empowerment vehicle, is capable of generating acceptable long-term growth in NAV per share, it is anticipated that the current portfolio will, over the next few years and in a stable, measured manner as divestment opportunities arise, be realigned with the intention being to seek fresh opportunities across a wider investment landscape, encompassing listed as well as unlisted opportunities.
The geographical split of Sandown Capital’s investment portfolio, on a net asset value basis, is currently 30% South Africa and 70% International. It is envisaged that the majority of new opportunities will continue to be internationally focussed.
Shareholders should be aware that strategically there is a preference for investing in a few, high-conviction opportunities, rather than building a more diversified portfolio. In principle, Sandown Capital would prefer to be a meaningful cornerstone investor, actively engaging with management and adding strategic value rather than be a holder of passive investment stakes. The deployment of permanent capital is seen as a clear advantage in the pursuit of this strategy.
The company intends utilising leverage, where appropriate, to augment its long-term returns. It also intends retaining and reinvesting all net income from its investments in pursuit of this aim. To the extent that attractive investment opportunities arise that are beyond current balance sheet capabilities, the company would seek to raise further capital from shareholders.
Benefits of investment strategy
The implementation of the above investment strategy will allow Sandown Capital shareholders to access a portfolio of high-quality, sector and geographically diversified investments designed to produce superior returns over the long term. The mix of listed and unlisted investments, together with the ability to utilise debt and equity capital where appropriate, and a focus on NAV per share growth, is designed to build shareholder value.