Sanlam Buying Stocks in Booze, Schools to Boost Small-Cap Fund

Sanlam Ltd.’s fund for investing in small- and mid-cap stocks is betting on private education and an alcohol company to boost returns.

Sanlam Investment Management’s Small-Cap Fund bought Curro (COH) Holdings Ltd., South Africa’s largest listed private education company, last year and has held it since because it’s a “long-term opportunity,” said Vanessa van Vuuren, the fund’s manager. The stock rallied 67 percent over the past 12 months to 26.43 rand by the close in Johannesburg yesterday. The fund last year also purchased shares in Distell, South Africa’s biggest producer of wine and spirits, she said.

Curro is “covering all the spectra of demand from the lower end to the upper end and even include pre-schools,” Van Vuuren said by phone from Cape Town on Feb. 7. “We’re not adding, but holding it.”

The FTSE/JSE Africa Small Cap Index rose 17 percent over the past 12 months, beating the 14 percent gain in the Johannesburg bourse’s all-share gauge. The small-cap index is made up of companies in the all-share measure not included in the FTSE/JSE Africa Top 40 Index or the FTSE/JSE Africa Midcap Index, according to the exchange’s website.

Curro, which is majority-owned by financial-services company PSG Group Ltd., will probably as much as double earnings excluding one-time items for the fiscal year through Dec. 31, according to a Jan. 20 statement. Distell (DST) estimates first-half profit will jump as much as 25 percent in the period through December, it said in a Feb. 12 statement. Distell rose 25 percent over the past year to 142 rand yesterday.

Local Production

Dennis Matsane, communications manager with Distell, declined to comment in an e-mailed answer to questions yesterday. Curro didn’t immediately respond to an e-mailed request for comment.

Stellenbosch, South Africa-based Distell is benefiting from a surge in demand for their ciders, which include Hunters and Savanna, locally and internationally, Van Vuuren said. A weaker rand is boosting the company’s exports and prompting consumers to switch to locally made drinks rather than imports, she said. That’s spurring Distell’s domestic production, Van Vuuren said.

The rand slid 19 percent against the dollar last year, the worst performer among 16 major currencies tracked by Bloomberg. It weakened 0.4 percent to 11.0117 per dollar by 8:08 a.m. in Johannesburg.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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