This case was featured in the December 2024 issue of Connect.
Who – the protagonist
PJ (Piet) Mouton, the CEO of PSG Holdings Limited.
What?
PSG Holdings was a listed South African investment company with significant stakes in various businesses, including its flagship and largest holding - Capitec Bank.
PSG Group Limited was founded in 1995 by Piet’s father, Jannie, who was described as the ‘Boere Buffet’. As an investment company, PSG had interests in industries such as food and related businesses, financial services, education and early-stage investment.
Under Jannie’s leadership PSG identified and invested in promising businesses across different sectors but eventually, the company shifted its focus to become a major player in the financial services sector.
Why?
Despite its solid performance, the market consistently undervalued PSG’s shares and the company had been bedevilled by the persistent discount of its share price relative to the sum of the parts (SOTP) value of the company.
The situation was such that PSG was in essence, a proxy for Capitec, and sometimes it traded below the value of its holding in Capitec.
With investors unsure whether PSG was trapped in value, their growing discontent mounted pressure on Piet.
When?
On 28 May 2021 Piet signed a letter to shareholders for inclusion in the February 2021 report. Piet knew its contents wouldn’t please shareholders.
Where?
PSG focused solely on investing in the South African financial services sectors, and was listed on the Johannesburg Stock Exchange.
Key quote
“Don’t give me problems, give me solutions”.
Piet had his father’s business philosophy ringing in his ears as he contemplated PSG’s persistent discount problem.
What next?
While the stock market had proven beneficial for PSG and its shareholders in the past, the company had lately only experienced the opposite effect. As the new financial year beckoned, Piet knew the challenge of finding a solution to PSG’s persistent discount to SOTP would be by far his biggest task for the year.
On reasons for writing the case…
Prince said: “I developed this case to provide students with a comprehensive framework for understanding the nuanced challenges of corporate valuation. The case enables students to explore advanced concepts such as value traps, discounted cash flow analysis, the agency dilemma, and the impact of unbundling strategies on shareholder value. It offers a unique opportunity to blend quantitative techniques with a critical evaluation of their limitations, to foster a deeper understanding of corporate finance principles.
“Writing this case also allowed me to contribute original content to business education and enhance my credibility as a professor of finance by creating localised teaching tools that have global applicability. My goal was to present a real-world scenario that encourages students to think strategically and approach valuation with a balance of analysis and critical thinking.”
On the case writing challenges…
Prince continued: “One of the primary challenges in writing the case was distilling a complex and multi-dimensional issue into a concise yet meaningful narrative. PSG Holdings' valuation dilemma involves numerous interrelated factors, including quantitative valuation techniques, strategic corporate actions, and investor behaviour. The difficulty lay in selecting the most relevant elements to present without losing the richness of the real-world context. My aim was to avoid oversimplification while ensuring the case remained accessible and engaging for students, fostering both rigorous analysis and thoughtful discussion.
“At the same time, it was rewarding to craft a case that authentically reflects the realities of the corporate world. The process allowed me to weave together practical lessons and theoretical insights in a way that highlights the challenges faced by executives in maximising shareholder value.”
On teaching the case…
He added: “Teaching the case has been an enriching experience. Situating it in a South African context made it particularly relatable for students, as they could connect the theoretical aspects of corporate finance with real-world challenges faced by a company they recognise. This relatability encouraged more engaged discussions and deeper exploration of the valuation concepts, strategies, and market dynamics presented in the case.
“Additionally, the teaching process offered a valuable opportunity to refine the case before submission. Through class interactions and feedback, I identified areas where additional clarity or emphasis was needed, which enhanced the overall effectiveness of the narrative. This iterative process allowed me to develop a case that is not only academically robust but also well-suited to stimulate critical thinking and practical application in corporate finance education.”
On how students react to the case…
He commented: “The response from students has so far been positive, appreciating its relevance and the way it connects text-book corporate finance concepts to practical, real-world challenges. The South African context resonates particularly well, as it allows students to engage with familiar market while exploring universal corporate finance issues. The case stimulates lively discussions, with students finding the valuation dilemma both thought-provoking and challenging. They enjoy the opportunity to apply quantitative techniques while grappling with the strategic and behavioural nuances that influence shareholder value, leading to a richer learning experience.”
On case writing tips…
Prince explained: “When writing a case, my target audience is always myself - first as a student and then as a professor. I reflect on my time as a student and consider the lessons I wish had been emphasised in finance classes. This helps me design cases that address gaps in traditional teaching, providing practical, relatable, and impactful learning experiences.
“I focus on creating cases that resonate with the realities and aspirations of my students. While the most popular cases involve large multinational companies and offer fascinating insights, the challenges they face often differ significantly from those encountered by professionals working in local or regional contexts. For this reason, I ensure my cases meet the immediate needs of my class, providing scenarios that reflect their industries and the market dynamics they are likely to encounter. A good case should bridge the gap between theory and practice, and provide students a toolkit to approach problems they are likely to face in their professional lives.”
Final word…
Prince concluded: “I was honoured to receive The Case Centre Writing Scholarship, which provided invaluable support in developing this case. The scholarship not only recognised my commitment to creating impactful teaching materials but also gave me the opportunity to refine my skills through workshops organised by The Case Centre on case writing and case teaching. These workshops were instrumental in enhancing my ability to craft cases that are both engaging and academically rigorous.
“The Case Centre’s commitment to advancing case-based learning continues to inspire educators like me to push the boundaries of teaching and create materials that bring real-world insights into the classroom.”
The case
Who – the protagonist
PJ (Piet) Mouton, the CEO of PSG Holdings Limited.
What?
PSG Holdings was a listed South African investment company with significant stakes in various businesses, including its flagship and largest holding - Capitec Bank.
PSG Group Limited was founded in 1995 by Piet’s father, Jannie, who was described as the ‘Boere Buffet’. As an investment company, PSG had interests in industries such as food and related businesses, financial services, education and early-stage investment.
Under Jannie’s leadership PSG identified and invested in promising businesses across different sectors but eventually, the company shifted its focus to become a major player in the financial services sector.
Why?
Despite its solid performance, the market consistently undervalued PSG’s shares and the company had been bedevilled by the persistent discount of its share price relative to the sum of the parts (SOTP) value of the company.
The situation was such that PSG was in essence, a proxy for Capitec, and sometimes it traded below the value of its holding in Capitec.
With investors unsure whether PSG was trapped in value, their growing discontent mounted pressure on Piet.
When?
On 28 May 2021 Piet signed a letter to shareholders for inclusion in the February 2021 report. Piet knew its contents wouldn’t please shareholders.
Where?
PSG focused solely on investing in the South African financial services sectors, and was listed on the Johannesburg Stock Exchange.
Key quote
“Don’t give me problems, give me solutions”.
Piet had his father’s business philosophy ringing in his ears as he contemplated PSG’s persistent discount problem.
What next?
While the stock market had proven beneficial for PSG and its shareholders in the past, the company had lately only experienced the opposite effect. As the new financial year beckoned, Piet knew the challenge of finding a solution to PSG’s persistent discount to SOTP would be by far his biggest task for the year.
Author perspective
On reasons for writing the case…
Prince said: “I developed this case to provide students with a comprehensive framework for understanding the nuanced challenges of corporate valuation. The case enables students to explore advanced concepts such as value traps, discounted cash flow analysis, the agency dilemma, and the impact of unbundling strategies on shareholder value. It offers a unique opportunity to blend quantitative techniques with a critical evaluation of their limitations, to foster a deeper understanding of corporate finance principles.
“Writing this case also allowed me to contribute original content to business education and enhance my credibility as a professor of finance by creating localised teaching tools that have global applicability. My goal was to present a real-world scenario that encourages students to think strategically and approach valuation with a balance of analysis and critical thinking.”
On the case writing challenges…
Prince continued: “One of the primary challenges in writing the case was distilling a complex and multi-dimensional issue into a concise yet meaningful narrative. PSG Holdings' valuation dilemma involves numerous interrelated factors, including quantitative valuation techniques, strategic corporate actions, and investor behaviour. The difficulty lay in selecting the most relevant elements to present without losing the richness of the real-world context. My aim was to avoid oversimplification while ensuring the case remained accessible and engaging for students, fostering both rigorous analysis and thoughtful discussion.
“At the same time, it was rewarding to craft a case that authentically reflects the realities of the corporate world. The process allowed me to weave together practical lessons and theoretical insights in a way that highlights the challenges faced by executives in maximising shareholder value.”
On teaching the case…
He added: “Teaching the case has been an enriching experience. Situating it in a South African context made it particularly relatable for students, as they could connect the theoretical aspects of corporate finance with real-world challenges faced by a company they recognise. This relatability encouraged more engaged discussions and deeper exploration of the valuation concepts, strategies, and market dynamics presented in the case.
“Additionally, the teaching process offered a valuable opportunity to refine the case before submission. Through class interactions and feedback, I identified areas where additional clarity or emphasis was needed, which enhanced the overall effectiveness of the narrative. This iterative process allowed me to develop a case that is not only academically robust but also well-suited to stimulate critical thinking and practical application in corporate finance education.”
On how students react to the case…
He commented: “The response from students has so far been positive, appreciating its relevance and the way it connects text-book corporate finance concepts to practical, real-world challenges. The South African context resonates particularly well, as it allows students to engage with familiar market while exploring universal corporate finance issues. The case stimulates lively discussions, with students finding the valuation dilemma both thought-provoking and challenging. They enjoy the opportunity to apply quantitative techniques while grappling with the strategic and behavioural nuances that influence shareholder value, leading to a richer learning experience.”
On case writing tips…
Prince explained: “When writing a case, my target audience is always myself - first as a student and then as a professor. I reflect on my time as a student and consider the lessons I wish had been emphasised in finance classes. This helps me design cases that address gaps in traditional teaching, providing practical, relatable, and impactful learning experiences.
“I focus on creating cases that resonate with the realities and aspirations of my students. While the most popular cases involve large multinational companies and offer fascinating insights, the challenges they face often differ significantly from those encountered by professionals working in local or regional contexts. For this reason, I ensure my cases meet the immediate needs of my class, providing scenarios that reflect their industries and the market dynamics they are likely to encounter. A good case should bridge the gap between theory and practice, and provide students a toolkit to approach problems they are likely to face in their professional lives.”
Final word…
Prince concluded: “I was honoured to receive The Case Centre Writing Scholarship, which provided invaluable support in developing this case. The scholarship not only recognised my commitment to creating impactful teaching materials but also gave me the opportunity to refine my skills through workshops organised by The Case Centre on case writing and case teaching. These workshops were instrumental in enhancing my ability to craft cases that are both engaging and academically rigorous.
“The Case Centre’s commitment to advancing case-based learning continues to inspire educators like me to push the boundaries of teaching and create materials that bring real-world insights into the classroom.”
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