If there’s one company on the JSE that has had an existential brush with corporate death, it is PPC. Having ridden South Africa’s pre-2010 World Cup construction boom, Pretoria Portland Cement stumbled into its own lost decade soon after.
Amid a trading environment that had become inexorably harder, PPC was wracked by vicious executive infighting that claimed the scalps of no less than three CEOs and two chairs between 2014 and 2019. It was swamped by cheap imports and undone by the state’s vanishing infrastructure spend, a disastrous African expansion and a mountain of debt. When Covid blew through in 2020, the cement maker had every chance of going bust.
Yet, almost exactly six years since the company reported a R2.4bn loss — double its then market capitalisation — the 134-year-old institution is back on form. For the year ended March, it made a little over R2bn in earnings; last week, it flagged a 40% rise in ebitda for the five months ended August, with margins at more than 22%.
So what has changed in the intervening period?
In a nutshell: Value Capital Partners (VCP).
“We can talk about it now because it’s out of the woods,” says Nono Mkhondo, the 42-year-old Goldman Sachs and Anglo American alumnus who heads VCP, an activist investment company founded by former Brait luminaries Antony Ball and Sam Sithole in 2016.
This was hardly the case when VCP took its first nibble of PPC in August 2017 with an exploratory 5% stake. At this point, PPC was more like a gasping former blue chip than an outright wreck, and while its shares were a stunning 90% below their record high of R53, it was hardly what you’d call penny stock material.
In the expectation of a relatively straightforward turnaround, VCP built its stake up to more than 15%. Yet business got worse, not better, and by November 2020 the stock had crumbled to just 48c a share. Set against that, its turnaround since then — a gain of about 1,500% — is a stonking result. Not to mention an exercise in endurance.
But it’s not just PPC; VCP is the common element in a raft of big-ticket JSE recoveries — most notably gaming group Sun International, food producer Tiger Brands and Altron. The former Net1, now Lesaka, is an investee company, as are Adcorp and AdvTech. VCP has just popped up on the shareholder register of Bytes, a company it helped unbundle and list from Altron in 2020, as well as logistics outfit Grindrod, in which it has taken a 6.2% stake. Metair, probably its most problematic child after PPC, remains one of Mkhondo’s main projects.
Fund manager Richard Cheesman, who in 2025 went solo with his own special situations hedge fund, reveals that he’s invested in Sun International because of the work VCP has done there.
“They’ve had a genuinely positive impact on the market. We haven’t really had activists before them, and there’ve been a couple of smaller ones since, like A² Investment Partners and Aimia, and it’s definitely good for the broader ecosystem,” he says.
Shareholder of reference
Titanium Capital’s Charles Boles says that when VCP starts to take a position in a company, “that would draw people in. They’re definitely a shareholder of reference that people would place a value on and would be buying if they saw them there.”
So what, exactly, is the VCP brand of activism? And how has a mostly minority investor managed to wield such clout?
At its core, VCP sees itself as a value investor, subscribing to the theories of Benjamin Graham and Warren Buffett. It looks for companies where there’s a “dislocation” between their value assessment and how they’re being priced. This could be strategic drift, mistakes in capital allocation or leadership blowouts. In short, companies that have lost their way.
Tapiwa Ngara, one of VCP’s three main investment directors and its head of fundraising, calls its method “constructivist”.
“We try to use the term to differentiate between ourselves and the sabre-rattling US brand of activism,” he says. “We don’t aim to usurp the company’s voice; we’re there to support in the background.”
These are hardly passive investors, however. Ball’s background in private equity is instructive. As its nonexecutive chair, he says: “Being an anchor shareholder in something you feel quite proprietary about [means] you’re going to work hard with it to make it better and more valuable — that’s what private equity people do. And that’s what we’ve tried to take into public market investing.”
Ball, for one, is “puzzled” that so many companies lose this element of purpose, but to some extent it’s the fluidity at the heart of the stock market that is to blame. Here, he recalls a truism from Serge Belamant, the flamboyant moustachioed founder of payments group Net1.
Belamant is an unlikely face of governance insight. Not only did he buy a PhD online, but Net1’s Cash Paymaster Services (CPS), a microlender, was central to the South African Social Security Agency (Sassa) grants payments imbroglio in 2013, when a dubious tender between CPS and Sassa was declared procedurally unfair and unconstitutional, putting 17-million recipients at risk of not receiving their grant payments.
Still, Ball recounts how they’d once told Belamant (before his retirement in 2018) to “go and listen to your shareholders”, which Belamant duly did via a roadshow in the US, where Net1 maintains a Nasdaq listing. About two months after, he said: “Antony, I’m never going to talk to them again, because when I went back three months later, they were all different.”
Family and friends
Seeded with capital they’d made after exiting Brait, Ball and Sithole’s first investment was a R400m punt on Altron. “Family and friends” followed suit, raising another R400m, and the company started institutional fundraising in December 2017. VCP now has about R16bn in assets under management — new money that has come its way from institutional investors, as well as money it has made on its investments.
Monde Nkosi, VCP’s third major principal, says what’s especially rewarding is that “in all those instances, the fruits of our work have been available to public shareholders because these companies remain listed, rather than being taken private in the conventional private equity model”.
The Altron punt paid off handsomely, and fairly quickly. VCP parlayed its 23% stake in the company into the steamy UK unbundling of Bytes in 2020, upon which it sold out.
Asked who has given them money, Ball says: “Pretty much all of the sizeable retirement funds in South Africa have got a 1%–2% exposure to us.”
So what is the pitch? After all, there’s nothing stopping these funds from simply buying shares in the same companies. Why do they need the VCP middleman?
Mkhondo says there are two counters to this line of argument, the first being timing: “It’s very easy for [others] once we’re in and in progress for them to think ‘OK, that’s what VCP is doing’, and yet the train has to some extent left the station.”
The second is the work that it does. Nowhere is this more graphically illustrated than at PPC, where what Mkhondo calls “soft power and influence” cut to the heart of the VCP “constructivist” method.
Among the first changes VCP wrought was an overhaul of PPC’s fractious board and executives. Ball and Mkhondo are reluctant to talk publicly about exactly how they did it, but without much public acrimony, what’s clear is that they managed a wholesale change — a feat that had eluded all PPC shareholders until VCP emerged on the scene.
“We try to make sure that we find a fair way to separate from people. It’s not acrimonious and we’re quite pragmatic,” says Mkhondo. It’s also very time-consuming.
Hands-on
“It’s very easy for other boards to say: ‘We’ll deal with this at the next board meeting’ and the next thing you know, a year has passed and your strategy is drifting. You just need someone who is willing to own the problem and that’s what we do: sit with the problem day in, day out. We’re willing to go back as many times as needed to find a workable solution,” she says.
This sort of hands-on approach is rare — both among nonexecutive directors and among shareholders who can just as easily sell out as buy in.
“If a business has got real issues, you need people, in my experience, to be far more constructively involved. If the business is on the right trajectory, going to quarterly board meetings and periodic meetings in between is fine, but if it isn’t, that doesn’t work,” argues Boles. “And the blunt truth of it is that to go and spend two or three days a week on a problem child, your incentive to do so just isn’t there.”
Boles says there was “a reasonable chance” that PPC could have hit the wall without VCP. “I think the level of involvement and commitment they put in, you would not have found from typical nonexecutives. But they had reputations on the line, and they couldn’t just walk away.”
For Mkhondo, the evolution of corporate governance often means that boards have become bogged down in corporate box-ticking, detached from a company’s real operational and strategic needs. “We pride ourselves that in big moments, we are able to encourage boards to make bold decisions that will have an impact on the trajectory of the companies we’re invested in,” she says.
In fact, during Covid, both Ball and Mkhondo ended up working full time for PPC, partly to deal with its terrifying level of debt.
“We had to focus on the capital structure, as opposed to the operational turnaround and we had to get that right,” says Mkhondo.
The person they thought would do the operational stuff — former Holcim executive Roland van Wijnen — was ultimately unable to deliver on a turnaround.
Having parachuted him in, “we all realised he’d bitten off more than he could chew and then Covid happened”, admits Mkhondo. PPC, she says, “needed a cultural reset. It was slowly dying. You could tell that morale was on the floor. Obviously almost a decade of successive CEO changes meant that the team had just lost confidence in the board and leadership. But then also in not facing the facts.”
Bad optics, good people
These unpalatable truths included PPC’s failure to keep on top of what was happening in its home market while it was trying to pursue growth opportunities further north. “The blenders were coming in, stealing market share, and there was a whole host of operational issues, but the business was still operating as if none of this was happening. You needed somebody who was happy to implement a radical overhaul and that was Matias,” Mkhondo tells the FM.
CEO Matias Cardarelli was VCP’s “last bite at the cherry”, she says.
Having heard of him through a contact at AfriSam, Mkhondo and Ball “spent months” courting the Argentinian, before his eventual appointment in September 2023. Getting his buy-in included Cardarelli bringing his own team along — Paulo Marques, the chief strategy officer, and COO Ernesto Acosta.
“If you think about any other listed environment,” says Mkhondo, “what board would agree to that? Having half your executive being Latin American expats! The optics of it are wrong, it’s expensive, but once we knew what we had in Matias and once we found alignment, we were willing to take the risk in terms of public scrutiny. You just need people who are going to be courageous in those moments because it was the right decision for the business.”
In Ball’s view, “leaders make businesses. The CEO and two or three people make all the difference. We have endless energy to get that right.”
Mkhondo counters: “I wouldn’t say it’s the only thing, but there can be no success if you don’t have a good leader in place. Putting in the right person isn’t always going to fix the problem, but if you do not have the right CEO you’re not going anywhere.”
Asked about the sort of support VCP has given, Cardarelli tells the FM that it’s rare to have a shareholder who truly has your back.
“The reality is that one of the most important moments in the process of coming to PPC was a long breakfast with Nono and Antony, here in Ballito, where my family lives. We shook hands, we aligned on the things we needed to do, and they walked the talk. Their support has been pivotal for the turnaround. I really mean it,” he says.
Clearly, board timidity is an issue. As Cheesman says drily: “You don’t want to get uninvited to the Sunday braais, so it is a tough thing they do and you would like to see more of it.”
It stems from a fear of failure, says Mkhondo. “I’m happy to take the flak and I do take the flak. I chair REM and NOM [remuneration and nomination committees] and so when it comes to shareholder votes I have to stand there and account for why we’re set up this way.”
But, as Metair CEO Paul O’Flaherty sees it, “this is a good position because you can give active influence on how the company is spending its money and who you’re actually hiring”.
O’Flaherty is another VCP appointment. The one-time Eskom financial director and former CEO of ArcelorMittal was brought in to try to salvage something from Metair in December 2023 — five years into VCP’s entry into the motor parts manufacturing company.
Asked for his thoughts on working with an activist shareholder, O’Flaherty says: “As management, you can’t favour one shareholder and you can’t ignore the board. So you have to be very careful. But if I’ve got a specific issue, I’ll ask: ‘How did you guys handle this? What did you do here?’ And they’re very good at giving advice.”
As Mkhondo tells it, “we’re not specialists; we’re generalists. That means if a CEO is dealing with an issue, we’re the people they call. If they’ve got an M&A issue and there’s a negotiation that’s tanking and they need support, we get on a plane and fly halfway across the world to see if we can help unlock the situation.”
Unluckiest company on the JSE?
Unfortunately, Metair is probably VCP’s worst investment call. Its shares have sunk about 75% since it first bought a stake in late 2018.
For the past five years, pretty much every year has presented Metair with a black swan event: Covid; the floods in KwaZulu-Natal which knocked its main customer out for a year; Türkiye and hyperinflation; and finally the war in Ukraine, which forced Metair to stop selling batteries to Russia, in accordance with European sanctions, wiping out about a third of its volumes.
“Despite our best efforts, every single year we’ve been dealt a huge blow. But we’re still invested, and it talks to our model: a lot of other investors would have cut and run, but we continue to look for solutions,” says Mkhondo.
“The one thing that allows us to hold our heads up high is that everybody makes poor calls and we are not fly-by-nights — we stick by these businesses and we do the right thing. Metair is one of the largest automotive components employers and if we’d just washed our hands, how many jobs would have been lost?”
Mkhondo also backs O’Flaherty’s decision to buy Autozone out of business rescue, despite the towering debt burden Metair is already under.
“The battery business is threatened because of imports, so when Metair comes out of this debt restructuring it needs to be able to think about what the future looks like and where the growth is going to come from,” she says.
While VCP has a fairly traditional time horizon to make good on its investment calls — about five years — not everything works out that way, as with PPC and Metair. And, says Mkhondo, “if we found a business that we thought could continue to meet our returns target over 15 years, we could hold it”.
Initially, VCP started “writing cheques” of about R200m. Its earliest investments included African Phoenix (the company that emerged when African Bank Investments Ltd came out of business rescue) and Grand Parade Investments. Now, its investments are between R1bn and R1.5bn.
It generates what it calls a “new idea” internally, and may take a toehold position in a share while it finishes its due diligence on a company. Once it’s convinced on how to unlock value, it goes back to its team and asks for the cash.
But “there are instances where you have a hypothesis and you start engaging with the company or experts or shareholders and during that process you come to the conclusion that the juice is not worth the squeeze” says Mkhondo. “So there are companies that have seen us pop up on their register and probably were holding their breath and then we just quietly disappear,” she laughs.
One notable example was Famous Brands. VCP just couldn’t reconcile how to make what is a quick-service restaurant business, set atop a manufacturing and logistics company, work.
Ball indicates that they’ve “walked all over” Spar too. “That’s the kind of thing we should look at. It’s got a strong brand, inherent strength and market presence, but there are a lot of operational things which are hard [to fix],” he says.
UK springboard
Instead, VCP’s two latest purchases are Bytes and Grindrod. In the case of Bytes, this is both a return to a company it knows well and a potential launchpad into the UK market.
“The market is suffering from the same dynamic South Africa is: low growth, low liquidity. So there are lots of overlaps in the mid-cap space where we play: undervalued companies that can potentially benefit from an engaged shareholder,” Mkhondo says. Nor is it a market where the aggressive US shareholder activism, à la Nelson Peltz, is likely to work.
Consider that an entire franchise in investment banking has spun out in defence against activist attacks. “Some boards see them coming and instead of engaging, their knee-jerk reaction is to put up the gates,” says Mkhondo. “Once you get into the more aggressive tactics there’s a real risk that you lose people along the way. There can be a lot of value destruction that can happen just trying to get yourself into a situation, and a risk that you lose momentum and focus on the work that needs to be done because you’re fighting each other.”
But back to Bytes: this is a company VCP was instrumental in unbundling from Altron in 2020, at an enterprise value to ebitda multiple of 20, which local analysts saw as something of a masterstroke. One source the FM spoke to says competitors in the industry “couldn’t fathom that Bytes could be worth the multiple it was when it listed in London”.
Either way, VCP decided to put all of its Altron holding into the listing to create a sufficient free float.
So why buy back in now?
For starters, the share price; having stormed all the way up to R160 by February 2024, the stock had fallen back to R64 by April 2026 . This was due to a combination of fears over the disruption AI would bring to software-as-a-service providers like Bytes, as well as changes to the way Microsoft engages with software resellers like Bytes.
Yet, says Ngara, who joined the Bytes board in July, “Bytes uniquely has the distinction of being a Microsoft partner — there are 16 of them in the world and only two in the UK”.
Ngara believes that the Microsoft changes have created “a temporary disruption”.
“There’s very little not to like; it’s not a PPC where there’s a need for a wholesale turnaround. We’re not doing open-heart surgery.”
VCP has also been instrumental in the appointment of Bytes’ new chair, Gavin Rochester, who served as CFO of former parent Altron from 1998 to 2002.
Constraints
VCP’s two main constraints are probably human capital and a shrinking market, which raise questions as to how big the fund can really grow.
“At the moment, there are five of us partners who can lead a deal, so at scale we want this business to be somewhere between 12 and 15 portfolio companies. We are capped by the intensity of what we do, not by ideas,” says Mkhondo.
But market chatter wonders if VCP “has more money than ideas”; analysts the FM spoke to also question how well VCP has done overall.
Asked about this, Mkhondo says the fund’s benchmark is the FTSE/JSE mid-cap index, though it tracks itself against the JSE all share too. “We have consistently outperformed both over five years and three years and delivered almost double our benchmark since inception,” she says.
The other issue for all South Africa-focused asset managers is the inexorably shrinking JSE, and a distinct lack of interest in South Africa’s mid-cap stocks. Who will buy VCP’s positions when it exits?
Boles, for one, thinks this fear is overblown. “For example, AdvTech has Coronation at a holding of approximately 29%. The PIC [Public Investment Corporation] frequently holds more than 20% of a company. Their holdings are not an aberration. Exiting a large holding has challenges but I don’t think this is a VCP issue — it applies to many fund managers,” he tells the FM.
Mkhondo says that because control isn’t central to VCP’s model, the company is not reliant on a single buyer or a negotiated sale to crystallise value.
“Because we hold listed shares, we do have the option to sell down in the market, which we’ve done extensively,” she says, citing the partial sales of its holdings in PPC, AdvTech and Tiger Brands on the open market.
“That said, we do have other tools available when it suits the situation. We’ve completed negotiated block sales [African Phoenix, Grand Parade], and we’ve also crystallised value via IPO [as with Bytes].”
The bigger plan is to attract more capital to target larger companies in South Africa and the UK for investments of over R3bn at a time. Not to mention stemming the tide of delistings here at home.
“There are companies that, if we had not got involved, probably wouldn’t exist today,” Mkhondo says. “It’s an important part of what we do: trying to make sure there is a very active and, hopefully, growing capital market.”