Page 12 - Stellar IAR2015

OUR BUSINESS AND INVESTMENT STRATEGYStellar Capital is an investment company focused on investing primarily in unlisted assets, working with management teams to create market leading businesses and ultimately realising and delivering value to its shareholders.Stellar Capital believes that it has a competitive advantage through the strength of its network providing access to proprietary deal ow, coupled with a management and investment team with demonstrable track record in building value in businesses and generating exceptional shareholder return.INVESTMENT POLICY1. Background and rationale1.1. Stellar Capital is an investment company focused on investing primarily in unlisted assets, working with management teams to create market leading businesses and ultimately realise and deliver value to its shareholders.1.2. Stellar Capital is quoted in the Equity Investment Instruments – Investment Companies (8985) sector of the JSE.1.3. Stellar Capital’s shareholders on 16 January 2015 approved the Company’s investment strategy contained in paragraph 3.1 incompliance with section 15 of the JSE Listings Requirements which deals speci cally with investment companies.1.4. Stellar Capital is proposing to add the matters contained in paragraphs 3.2, 3.3, 3.4, 4, 5, 6 and 7 to its existing Investment Policy as approved by the JSE and which is to be approved by the Company’s shareholders in terms of section 15.7 of the JSE ListingsRequirements.1.5. The additions to the Investment Policy are being proposed to:1.5.1. 1.5.2. 1.5.3. 1.5.4. 1.5.5.2. De nitionselaborate on the Company’s investment focus areas;de ne the sectors and geographies of primary interest;expand on the criteria for the Company’s investment into and divestment from investments;set measurable growth targets and con rm the Company’s discretionary dividend policy; andcommunicate the manner in which the Company will forthwith categorise and communicate corporate actions and seek shareholder approval in respect thereof.2.1. 2.2. 2.3.“Category 1” bears the same meaning as de ned in the JSE Listings Requirements; “Category 2” bears the same meaning as de ned in the JSE Listings Requirements“Transaction” bears the same meaning as de ned in section 9 of the JSE Listings Requirements. For the avoidance of doubt, to the extent a transaction with a non-related party is concluded in the ordinary course of business in terms of paragraph 7.1 below and constitutes less than 10% of the market capitalisation of the Company, such transaction will not be categorised in accordance with the JSE Listings Requirements.3. Investment strategy, parameters and scope3.1. Investment strategyThe investment strategy of the Company, which was formally approved by the Board on 3 December 2014 will entail the following:3.1.1. to grow a portfolio of equity, debt and hybrid securities, unconstrained by any particular market or sector, in listed andunlisted businesses, that will generate above average returns on capital for the Company’s shareholders;3.1.2. to apply a hands-on investment approach, in order to assist management teams and to provide strategic input, withoutassuming direct operational responsibility;3.1.3. to apply a exible investment approach relating to the timing and duration of investments;3.1.4. to actively engage with investee companies in relation to their corporate activity and other strategic initiatives; and3.1.5. to leverage the existing network of Manco to create a unique, well-diversi ed investment vehicle which will be anattractive proposition for institutional investors.3.2. Investment focusStellar Capital has been established to:3.2.1. hold a combination of strategic equity instrument investments as its primary objective and, as secondary objective andusually for limited periods, controlling equity investments under circumstances where the Company has obtainedapproval from the JSE to hold such controlling equity instrument investments;3.2.2. earn high levels of current income from dividends and a credit investment portfolio comprising debt and hybridsecurities which supports sustainable free cash ow and dividend yield; and08 | STELLAR CAPITAL PARTNERS