South Africa’s richest man, billionaire Johann Rupert, has recently made the decision to completely exit from British American Tobacco (BAT), thereby severing his family’s long-standing ties to the tobacco industry.
This significant move was announced on January 14, 2025, by Reinet Investments, one of Rupert’s investment groups.
Rupert agreed to sell over 43.3 million ordinary shares in BAT at a price of £28.20 per share, generating gross proceeds of approximately £1.22 billion (around R28.3 billion). This sale was facilitated through an accelerated bookbuild process that began on January 13, 2025.
Historical Context of the Rupert Family Business
The Rupert family’s affiliation with the tobacco sector dates back decades, originally propelled by Johann Rupert’s father, Anton Rupert, who founded the Voorbrand Tobacco Company in the 1940s.
This enterprise laid the groundwork for the family’s wealth, eventually evolving into Rembrandt Group, which entered South Africa’s cigarette and tobacco industry in 1948.
In the 1970s, the Rupert family diversified into various industries, including financial services and mining. This diversification culminated in a strategic merger of their tobacco businesses into Rothmans International in 1995, which was subsequently integrated with BAT’s operations shortly after.
The non-luxury-related activities of Richemont—including tobacco—were spun off into Reinet Investments in 2008, at which point the Rupert family continued their involvement with BAT.
Strategic Reasons Behind the Exit
Johann Rupert’s departure from BAT signals a pivotal change in strategy for Reinet Investments. Prior to this sale, BAT constituted 24% of the net asset value of Reinet, with approximately 48.3 million BAT ordinary shares in their possession as of September 30, 2024.
This is a considerable stake, highlighting the importance of the tobacco business to the family’s investment portfolio.
In addition to the recent sale, Reinet had previously offloaded 5 million BAT shares between November and December 2024.
With the completion of this latest transaction set for January 16, 2025, Reinet Investments will fully divest and hold no interest in BAT moving forward.
The proceeds from this sale are intended to be utilized for ongoing investment activities, suggesting a strategic pivot towards sectors that align more closely with current market dynamics and perhaps a broader trend of reducing exposure to the tobacco industry.
The End of an Era
The decision to exit British American Tobacco marks the end of an era for the Rupert family in the tobacco sector. Johann Rupert, with a net worth around R213 billion, is well-positioned through his interests in various business groups, including Richemont and Remgro.
The legacy of tobacco as a cornerstone of the Rupert family’s wealth is concluding, reflecting changing market sentiments and evolving investment strategies.
As Reinet prepares to announce its 31 December 2024 net asset value, the complete divestment from BAT is a notable punctuation mark in the Rupert family’s storied history in the tobacco industry.
This move not only reshapes Reinet’s investment strategy but also signals a potential shift in focus towards industries with sustainable growth prospects.