Frankin frankly in it for money
A TRIO of experienced businessmen has formed a partnership to make the most of business opportunities in South Africa.
Called Frankin, its members are Mervyn King, Nicholas Frangos and Eric Ellerine. King, an advocate by trade and a one-time newspaper reporter, has spent the last eight years salvaging the Frame group from near-disaster to a company full of promise if a textiles deal with an Oriental partner can be struck.
Earlier this year, King became non-executive chairman of Frame in order to devote a decade or so to Frankin.
Frangos rose to prominence with the listing of information technology company Datakor in 1987. When Sanlam reorganised its technology interests two years ago, Datakor became part of Dimension Data and Frangos left to pursue his own interests.
Ellerine, doyen of furniture retailing, has established the formula that brought outstanding returns to Ellerine Holdings shareholders for many years. Ellerine has an eye for backing entrepreneurs.
King says that when a business is acquired, one of the three will be assigned to chair it and add value. The principle also lends itself to partnering black entrepreneurs, as in Frankin's first deal, effected through the listed cash shell Crendell.
Crendell is the vehicle through which Video Lab has been bought in a R114-million transaction. Video Lab is a post-production company in the video and film business.
King notes that overseas film companies have begun to see the advantages of using South Africa as a location for movies: it has weather, scenery, people, and it is cheap.
"Frankin believes that in the next century, people will have more leisure time, and the leisure and entertainment industries will grow. Video Lab has excellent management and will be the core in building an entertainment group under Nic's guidance," says King.
Crendell will be renamed Sasani (Zulu for rejoice). It seeks other acquisitions, possibly further upstream in the movie-making business - the provision of a total package of equipment to movie-makers could provide a lucrative income.
Sasani's participants also include Msomi Ventures, the company of entertainment personality Welcome Msomi, the National Sports Council, and new company Black Ink. These three plus Frankin have formed Sasani Investments, which has bought 41,5% of Crendell.
Video Lab was a 50-50 venture between its management and Interleisure. It will retain 41,5%, and the Crendell minorities 17% - an offer will be made to them at net asset value, expected to be about 20c. Crendell is to raise R51-million in a rights offer at 18c to fund part of the Video Lab acquisition. Msomi has been appointed chief executive of Sasani.
Frankin, which has R20-million in start-up capital, has also invested in three greenfields operations: Smartec aims to develop state-of-the-art automatic teller machines, Superliner centralises the orders from and distribution to 200 independent dealers in fast-moving consumer goods, and Medwise is a managed healthcare system. King says they are all new businesses in growth areas.
King says it is intended to list Frankin in the longer term. "The three of us want to do something new, have some fun, and hopefully make some money along the way."
Application has been lodged to release Crendell from suspension; it last traded at 122c. While this exacts a demanding rating based on pro forma earnings of 2,17c, I would not be surprised to see it fly further.