/ 6 January 2006

Treger to invest in BEE

Julian Treger, the activist investor known for causing a number of boardroom bust-ups in London, has emerged as a key player in an investment vehicle seeking to finance black economic empowerment in his native South Africa.

Treger wants to use a shell company listed on Aim, London’s junior market, to invest in companies in South Africa that, under local rules, are required to boost their black ownership. ”There is a real shortage of equity in South Africa. No foreign entities have been backing BEE,” said Treger, who is based in London but currently in South Africa.

The shell company, Illuminator, is asking its investors for permission to change its investment strategy, which was originally to look for opportunities in European industrial business services. It would change its name to Blackstar Investors and relocate to Luxem­bourg for tax purposes. This means its shareholders would no longer be governed by the City of London code on take­overs. It is also hoping to complete a share placing. Its shares are suspended at present. Blackstar would take minority stakes in special-purpose vehicles set up to further BEE.

Treger, who while running the Active Value fund management group targeted well-known names such as Liberty and Pilkington, said he did not expect to use an ”activist” approach in South Africa. With his former partner Brian Myerson, Treger became known for an aggressive investment style, pushing for change at companies. Not all their efforts were successful: they lost £30‑million trying to stop advertising group WPP from taking over Cordiant.

Active Value is now being wound down and Treger expects to devote most of his time to a new vehicle, Audley Capital Advisors, to try to take companies private.

Treger owns 15% of Illuminator, while other funds associated with him have a beneficial interest in Blackstar Managers, the fund management group the renamed company intends to appoint to seek investment opportunities in South Africa. In addition, funds associated with him are entitled to share in performance fees payable to Blackstar. Stockbrokers Shore Capital will also get a share of the performance fee.

Treger has identified two companies for investment: steel group Eurosteel and an unnamed ”significant South African-based resources group entity”. — Â