Investment manager scores high performance fee after sale of the holding company's largest asset.
Reinet has been left with an enormous pile of cash following the sale of its PensCorp stake, and no obvious plan for it. Image: PensionCorp website
A Jersey-registered entity controlled by Rupert family interests was paid an outsized performance fee of €117 million following the sale of JSE-listed Reinet’s largest asset – a 49.5% stake in specialist UK insurer Pension Insurance Corporation (PensCorp) – during the 2026 financial year.
This is revealed in the investment holding company’s annual report, which was published at the start of July. At end-March exchange rates, the performance fees equate to R2.266 billion.
Reinet’s sale of the stake in PensCorp for €3.345 billion closed on 27 March, approximately R62 billion at the time.
Reinet Investment Advisors Limited is Reinet’s investment advisor and is paid both a management fee and performance fee annually. Last year, the former was €44 million (R861 million at the time). This is down from €54 million in FY 2025.
Fee calculation
According to Reinet’s prospectus, the management fee is payable semi-annually (in arrears) and is calculated based on 1% per annum on the net asset value (NAV) of Reinet’s invested assets (everything except cash and third party-managed fund interests) plus 0.25% per annum on the net asset value attributable to cash.
It is paid 0% on interests in funds managed by third parties as those would typically have their own internal fee structures.
The performance fee is calculated as 10% of the cumulative total shareholder return, including dividends paid, measured since the December 2008 rights issue up to 31 March 2026, less the sum of all performance fees already paid in prior periods.
This means the fee is ‘high-water mark style’ calculation.
The sale of the PensCorp stake meant Reinet realised a gain of €2.075 billion in FY26, resulting in a much larger performance fee.
Go/no-go condition
In addition, the performance fee has a so-called ‘gating condition’.
It is only payable if Reinet’s volume-weighted average market price (VWAP) measured across the Luxembourg Stock Exchange, Euronext Amsterdam, and the JSE over the last 20 trading days of the financial year exceeds a specified threshold.
This was €22.49 for FY2026, which was comfortably reached (the actual VWAP came in at €28.48).
These fees are paid within 30 days of each “performance measurement period end”.
Cash-flush
Reinet itself has a complex web of similarly named entities, including Reinet Investment Advisors (the investment advisor) as well as two management companies within the structure itself:
- Reinet Investments Manager (the general partner of the listed holding company), and
- Reinet Fund Manager (the general partner/management company of Reinet Fund).
The sale of the PensCorp stake leaves Reinet with an enormous pile of cash and no obvious plan for it.
According to a note from Allan Gray in October 2025, the “sale of Pension Insurance Corporation to Athora for £5.9 billion (after dividend entitlements) … further bolsters Reinet’s balance sheet and unlocks substantial value from its largest unlisted holding”.
It added that “what makes Reinet’s valuation particularly compelling is that its market capitalisation is now lower than the combined value of its net cash and Pension Insurance Corporation sale proceeds”.
At 31 March, Reinet had a NAV of €6.6 billion (R113.5 billion at the time).
The holding company currently has a market value of R87.8 billion.
Allan Gray says its main considerations for Reinet are the fee structure, private equity valuations, and capital allocation uncertainty. The last of these is the biggest unknown. It adds that is has “made provisions for fees payable to Reinet” in its valuation of the business.
In its thesis, it does highlight that Reinet has R14 billion in “outstanding commitments to private equity funds”.
“Due to limited disclosure, these assets are often difficult to value independently and are therefore subject to valuation discounts by the market. The current [at that time] 33% discount to NAV already reflects investor scepticism regarding the private equity holdings. In fact, the market is effectively assigning zero value to these assets. This creates a margin of safety: If the private equity funds deliver even modest returns, they could add upside without requiring a rerating of the rest of the portfolio.”
According to the fund manager, “what could truly unlock value for shareholders is thoughtful capital allocation”.
Here, it says, Reinet has multiple options:
- Return capital to shareholders via buybacks or special dividends;
- Wind down the structure and distribute assets (the investment manager is going to earn far lower fees on the pile of cash); or
- Reinvest selectively.
Exiting the private equity commitments would be tricky, making a wind-down complex.
For now, a repurchase programme is underway with a maximum value of only €500 million, which has underwhelmed the market.
Reinet shares are down 20% since the end of March.
This article was republished from Moneyweb. Read the original here.
