Our opinion on the current state of ETHOSCAP(EPE)Ethos Capital Partners (EPE) is a private equity fund (PEF), incorporated in Mauritius, which invests in 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 2023, the company reported net asset value (NAV) down 15% at 731c per share. The company said, "The value of the unlisted portfolio was slightly down (3%) over the six-month period, with positive returns from Synerlytic, Crossfin, Gammatek and TymeBank and Twinsaver offset by devaluations in Echo, Kevro and Optasia (which was impacted by the significant devaluation in the Nigerian Naira ('NGN'))."
In an announcement on 24th June 2024, the company reported that its NAV on 31st March 2024 was 10,24c and announced the imminent unbundling of its holding of Brait shares. Ethos shareholders will get 0,50857 Brait shares for every Ethos share held on 9th July 2024.
EPE 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 the 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.
