Agribusiness-focused investment holding group Zeder has inked a R1.6bn deal to sell its majority stake in transport-services business The Logistics Group (TLG), news that sent its share price to its highest level since it unbundled its Pioneer Foods stake in early 2020.
Zeder, part of the PSG Group stable founded by Jannie Mouton, has been reviewing its portfolio, with its shares under cautionary since April amid “several approaches” from buyers interested in parts of its business. This has led analysts to question the future of the group’s JSE listing.
The sales agreement to funds managed by African Infrastructure Investment Managers (AIIM) values TLG at R1.6bn, and Zeder’s 98.2% stake at R1.57bn — about a 10% premium to the value of the stake at end-August.
AIIM invests across East, West and Southern Africa, with $2bn (R30.6bn) in equity under management. TLG is an integrated logistics group, with warehouses and port assets in Cape Town, Durban, Gqeberha and Maputo.
Zeder’s share price leapt as much as 9.2% to R3.44 on Friday, narrowing the discount at which its shares trade to the sum of its parts to a quarter.
Chris Logan, founder and chief investment officer of Opportune Investments, said TLG is a “great company,” noting its value has been marked up by Zeder from R978m in February 2019, when it was unbundled from fruit group Capespan.
Fair reflection
“While the market has welcomed the sale, it’s actually very sad and an indictment of the present state of the JSE that companies the calibre of TLG are bought out by private equity rather than listed on the JSE, particularly now that the rest of the world is experiencing a red hot initial public offering boom,” said Logan.
Small Talk Daily’s Anthony Clark said TLG is the most saleable asset in Zeder’s portfolio. The offer was a fair reflection of the value of the business. “This is a feather in Zeder’s cap,” said Clark. However, with only four assets left in the group, remaining listed is a questionable proposition.
TLG made up just under a quarter of the group’s R6.1bn portfolio, and the value of the stake had increased R105m in the course of Zeder’s first half to end-August, benefiting from robust demand from exporters, but also higher demand for imports, such as fertiliser.
The group’s biggest investment is a 97% stake worth R2bn in Zaad, which imports and distributes a broad range of agricultural seeds and chemicals with a focus on emerging markets.
Lame duck
The group also has a R1.39bn stake in JSE-listed trade and services group Kaap Agri and a R1.12bn stake in fruit producer and seller Capespan. It holds R146m of Agrivision Africa, which owns and operates two large-scale commercial farming operations and a milling business in Zambia, which has fallen from a value of R591m at the end of the group’s 2018 financial year, with Zeder citing pressure from soft commodity prices amid recent writedowns.
Capespan is also likely to be in investors’ sights, said Clark, while Zeder is likely to hold on to Zaad. Agrivision Africa is a “lame-duck asset”, he said.
The group has been looking to unlock value from its underlying assets after a strategic review initiated in September 2020.
This followed the successful disposal of its stake in Pioneer Foods for R6.41bn in March 2020 and the sale of its interest in Quantum Foods for R308m in June that year.
This enabled the group to declare special dividends totalling R4.23bn for its 2021 year, when it also bought back R426m (about 10%) worth of its own shares.
Zeder closed up 2.2% at R3.22 on Friday, giving the group a market value of about R5bn. Its share price has risen by a quarter so far in 2021.
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