Coronation Bets on Hosken After Omnia Rights Offer Pays Off

Coronation Fund Managers Ltd.’s small-cap fund is buying Hosken Consolidated Investments Ltd. (HCI) as the money manager profited from its stake in Omnia Holdings Ltd., which has more than tripled in four years.

“HCI was already a big position in our fund,” Siphamandla Shozi, who helps oversee the Coronation Smaller Companies Fund (CORSPEG), said by phone from Cape Town on Feb. 18. “We’ve added more over the past three months or so. Over time they’ve created value for shareholders with the investments they have done.”

Coronation’s fund of small-cap stocks returned 0.5 percent this year compared with the FTSE/JSE Africa Small-Cap Index’s 2.1 percent gain and the FTSE/JSE Africa Midcap Index’s 3 percent decline over the same period, according to data compiled by Bloomberg.

Coronation underwrote 300 million rand ($27 million) of Omnia (OMN)’s 1 billion-rand rights offer in 2010 as the South African supplier of explosives and chemicals to BHP Billiton Plc and Rio Tinto Plc needed capital to build a second nitric acid production facility.

“We took a big stake in the company and it was a big part of our fund,” Shozi said. “Omnia has done very well. We benefited a lot from it.”

Omnia’s sales for the six months to Sept. 30 jumped 26 percent, while earnings per share rose 17 percent, it said Nov. 26. Revenue at the company’s mining division was boosted by the 8.3 percent slump in the rand against the dollar in the period, according to Omnia.

HCI owns controlling stakes in a Cape Town-based bus service, independent broadcaster e.tv, a bingo center operator, a colliery and a convention center. The stock dropped 2.7 percent this year to 135.25 rand by the close yesterday. Omnia advanced 6.8 percent in 2014 to 215.62 rand.

“We like the HCI story,” Shozi said. “We like the management. We like the underlying assets and think it is a very good business.”

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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