Short-seller who took on Steinhoff sets sights on plastics firm RPC Group
The short-seller whose research group uncovered financial irregularities at South African retailer Steinhoff has struck out at plastics company RPC Group.
Fraser Perring claims the FTSE 250 company has used a string of acquisitions to mask falling earnings, and said it had used “aggressive accounting” processes to allocate large sums of money as goodwill, making its end-of-year figures look artificially healthier.
The firm, worth around £3bn, is currently in talks with private equity groups about two potential buyout offers, saying it September it was holding talks with Apollo Global Management and Bain Capital.
Both have a week to make a bid for RPC – which makes engineering parts, and packaging for drinks, food and cosmetics – following two deadline extensions.
RPC has made a series of large acquisitions in recent years, including buying US-based rival Letica for up to $511m (£399m).
Former social worker Perring believes the purchases allowed RPC to cover losses. A report by Perring’s Viceroy Research group says: “either profits of acquired companies are unsustainable and collapse the following period or acquisition contribution masks profit decline of the existing business (or both).” It labelled RPC group a “big avoid”.
He has taken an undisclosed short position in the firm, which is currently being shorted by around 5 per cent of its shareholders according to the latest filing data. Investors short sell a stock when they believe its value will drop.
RPC Group’s shares closed at 760p on Friday, having stood at 860p at the start of the year. The firm did not reply to a request for comment.
Perring first came into the spotlight last December, after Viceroy published a detailed report about Steinhoff that revealed accounting irregularities. The retailer’s shares plunged by 85 per cent, causing it to lose $10bn from its valuation and prompting its boss Markus Jooste to quit.