Investment group Brait yesterday finally announced the listing via private placement of its Southern Africa food, home and personal care goods subsidiary Premier, on December 8.
The listing will be by way of an offer of shares held by Brait Mauritius, a subsidiary of Brait, which is expected to raise up to R3.7 billion. Brait first mooted plans to list Premier in July last year, but held off the listing due to poor market conditions.
The share pricing range of R53.82 to R67.04 per offer share was proposed, which is expected to result in an equity valuation of R6.9bn to R8.6bn or a six to seven times earnings’ multiple, based on earnings for 12 months to September 30, Brait said in a statement yesterday.
This represents a 10% to 28% discount to Brait’s latest valuation of Premier, after adjusting for the R1bn refinancing of Premier’s long-term debt on November 2. Of this refinancing, R950m was distributed to Premier’s shareholders prior to the listing.
Small Talk Daily Research analyst Anthony Clark said there would likely be market interest in the listing.
However, he said the shares would probably be taken up in the lower end of the price range because “no portfolio manager worth his salt will want to be long on a listing ahead of the quiet season for financial markets and considering the uncertainties,” which he said included the ANC’s elective conference, questions about inflation, the Russia-Ukraine conflict and growth in China.
Clark said Brait, however, appeared to be intent on listing this year, and it was possible that with the US’s Dow Jones Index and the JSE being up about 15% since September, their management may have felt there was “enough of a feel good factor to say okay, lets list right now.”
Vestact Asset Management CEO Paul Theron said the listing was a “good idea” from a local investors’ point of view, as new listings were “in short supply”. On the other hand, he said companies operating in some of Premier’s major markets were not performing well and the market environment was not favourable. He said the listing price seemed modest.
Premier Group CEO Kobus Gertenbach said the listing was an exciting step in their growth story, and would support the organic and acquisitive growth strategy, and strengthen its market position across all business areas.
He said the executive management would remain invested in Premier, ensuring alignment between existing and new shareholders.
Brait will receive up to R3.7bn from the offer which, with its share of the November 2022 distribution, totals up to R4.7bn. This will be used to address Brait’s future liquidity requirements. Brait said yesterday it remained committed to distributing its assets to shareholders.
Titan Premier Investments, headed by well-known businessman Christo Wiese, will buy 36.2% of the offer shares, while an institutional investor had agreed to purchase a further 2.4% of the Premier offer shares.
Titan and Rand Merchant Bank had committed to underwrite R2.9bn and R500 million respectively, at the bottom of the price range.
Meanwhile, Brait said yesterday its net asset value per share, its key performance indicator, increased 0.4% to R8.40 in the six months to September 30. Available liquidity at reporting date was R451m. Its other two major investments are in Virgin Active and New Look in the UK.
On November 4, Premier paid a R950m distribution to shareholders. Brait’s proceeds resulted in post-balance sheet available liquidity, including cash, rising to R913m.
According to DataOrbis market share data by value for the 12 months to August, 2022 Premier had an about 24% market share in bread; 32% market share in flour; 20% market share in maize; 18% market share in total sugar-based confectionery; and an 18% market share in feminine care in South Africa.
In the bread category for the 12 months to August, Premier held the market leading position in the Western Cape (37%), the second largest market share in KwaZulu-Natal (30%), and the Eastern Cape (34%).
Over the past three financial years, Premier grew revenue and its adjusted earnings before tax depreciation and amortisation at compound annual growth rates of 15% and 20%, respectively.