A business advisory firm, Morgan&Co this week queried the price tag placed on South Africa-based Cape Grace Hotel after Meikles unveiled plans to dispose of its stake in a company that controls the asset.
The Zimbabwe Stock Exchange-listed Meikles recently said it could sell its 35% shareholding in Mentor Africa, which owns Cape Grace.
Mentor Africa is a diversified business with tentacles in the tourism, hospitality and energy sectors.
Morgan&Co said Cape Grace was valued at around US$17.8 million in 2013.
It said its current price of US$4.5 million could be a big undervaluation. Morgan&Co said:
In its latest annual report, Meikles valued the Mentor Africa stake at a paltry US$4.5 million which represented an 87% loss on the investment and left many investors’ questions unanswered.
We note that the depreciation of the rand was also key in the loss of value but given that the depreciation effect of the rand to the United States dollar between 2012 and 2021 was only -46.3%, the remaining sources of value erosion are yet to be ascertained.
We note that, had the business not consummated the transaction and remained with full ownership of Cape Grace, the investment would be worth more than US$15 million today.
It said with its agriculture and hotel businesses out of the way, Meikles had evolved into a fast-moving consumer goods retailer with the TM Pick n Pay chain stores that it owns in partnership with JSE-listed Pick n Pay.
In 2018, businessdigest reported that Meikles chairperson John Moxon had a tough time defending some of the group’s offshore investments as shareholders sought answers.
A minority shareholder, Eddie Cross, questioned Moxon at an annual shareholders’ meeting over Meikles’ investment in Mentor Africa Ltd if it was creating value for investors.
Cross told businessdigest that he was not happy with the performance of the Mentor Africa investment.
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