Strategic Asset Disposal Reflects Broader Investment Goals Rather Than Industry Weakness
In recent months, Zeder Holdings, a prominent investment firm with significant interests in agriculture, has made headlines with its decision to divest two major top fruit farms in South Africa. These transactions, which involve Theewaterskloof Farm and Applethwaite Farm, have sparked discussions about the state of the South African apple and pear industry. However, Zeder Holdings’ CEO Johann le Roux emphasizes that these sales are driven by strategic financial goals rather than any shortcomings in the fruit sector itself.
Strategic Asset Sales to Unlock Shareholder Value
In June, Zeder Holdings signed a contract to sell Theewaterskloof Farm for R283 million (approximately €14.4 million). Following this, an announcement was made about the sale of Applethwaite Farm in Grabouw for R190 million (about €9.7 million). These decisions are part of a broader strategic move by Zeder Holdings to optimize its investment portfolio and unlock shareholder value.
Johann le Roux, CEO and Chief Financial Director of Zeder Holdings, clarified that the sale of these top fruit farms does not reflect any dissatisfaction with the apple and pear markets. “These are all very good farms, and very well-run,” Le Roux asserts. “In my opinion, apples and pears are actually on a fairly strong upwards trajectory. It’s a very good business to be in.”
Le Roux elaborates that Zeder Holdings is currently trading at a discount to its net asset value (NAV). This is a common issue for investment holding companies, where the market value of the company’s assets does not always reflect their full worth. By selling these farms, Zeder Holdings aims to realize their NAV and thus enhance value for their shareholders. “If you can sell an asset against your NAV, you immediately unlock that discount for your shareholders,” Le Roux explains.
The Current State of the South African Apple and Pear Industry
Despite the sale of these farms, the South African apple and pear industry remains robust. The country is known for its high-quality fruit production, which continues to perform well in both local and international markets. The recent success of South African apples and pears on the global stage attests to the strength of the industry, which has been buoyed by favorable growing conditions and a growing demand for premium fruit varieties.
Le Roux highlights that the apple and pear business in South Africa is on an upward trend, which aligns with broader market observations. The global demand for South African apples and pears is strong, supported by the fruit’s superior quality and the country’s advanced production techniques.
Future Plans and Ongoing Investments
Looking ahead, Zeder Holdings will continue to focus on its strategic investment goals. While the sale of Theewaterskloof and Applethwaite Farms represents a significant shift in their agricultural assets, the company is also planning to divest a third, smaller production unit and is engaged in discussions regarding the future of the Novo fruit packhouse in Paarl.
Furthermore, Zeder Holdings maintains a strong presence in the agricultural sector through its substantial stake in Zaad Holdings, which encompasses Klein Karoo Seed Marketing. This investment underscores the company’s ongoing commitment to the agricultural industry, particularly in the seed and agricultural inputs sector.
