Christo Wiese’s Brait is set to hand the JSE its first initial public offering (IPO) of the year later this month in the form of food producer Premier Foods.
The listing of Premier — which owns brands such as Blue Ribbon bread, Iwisa maize and Snowflake flour — will result in Brait retaining a 47.1% stake in the company, putting Wiese in the pound seats.
Premier will list on the JSE’s main board on March 24.
The offer price was set at R53.82 per share, giving it an initial market valuation of R6.9bn.
Brait, the private equity firm that owns Premier, first signalled the intention to float Premier in a stock exchange announcement in November, hoping for a listing for December.
However, the IPO was called off early in December amid market turmoil after it emerged that President Cyril Ramaphosa may have violated the constitution in the Phala Phala forex saga.
Brait said on Friday it had secured commitments from managers such as Allan Gray, Abax Laurium, Mergence and Steyn Capital to subscribe for the shares.
Eligible SA and international investors will acquire up to 65,031,586 ordinary shares, excluding the over-allotment option consisting of 1,858,046 ordinary shares.
Market share
Brait said the listing will enable Premier to access capital markets, which it may use to support and develop further growth in line with its strategy and to finance acquisitions.
The company has about 24% market share in bread, 32% in flour, 20% in maize and 18% in total sugar-based confectionery, according to DataOrbis market share data.
Its main competitors include Tiger Brands, AVI and RCL Foods.
The food maker’s top executives are set be benefit handsomely from the listing and might end up owning 3.5% of Premier’s ordinary shares in issue in the coming years.
Premier intends to declare a maiden dividend in 2024 after the release of the full-year financial results, to be paid out of retained earnings, the company said in its prelisting statement.
In financial year 2022, Premier generated revenue of R14.5bn and adjusted earnings before interest, tax, depreciation and amortisation of R1.5bn.
The listing comes four months after that of Zeda, which was hived off industrial conglomerate Barloworld. Zeda owns Avis and Budget.
Torrid 2022
IPOs have been rare in the past few years due an economic environment, locally and globally, that is deeply challenged and complex and less than ideal for new listings.
The JSE had a torrid 2022 with a number of delistings driven by corporate actions and lower liquidity in the small-capitalisation market. A total of 22 companies delisted from the exchange last year, taking the number of listings down to 302, from 466 20 years ago.
The bourse’s CEO, Leila Fourie, said last week that while it has seen a steep decline in listed companies over the past two decades its market cap had increased exponentially. “Our market cap has grown from R1.8-trillion [20 years ago] to R22-trillion now,” she said.
Anchor Capital’s CEO Peter Armitage said the JSE should be worried about the huge number of delistings as it means less business for the bourse and a smaller financial market for the country.
He expects more companies to leave the JSE. “The valuation achieved by particularly smaller companies is less than what is achieved in private.”
One of the criticisms levelled at the JSE is that it has been largely an institutional market that lacks deep penetration by retail customers.
Grow listings
“The JSE is predominantly an institutional market by volume, though there are increasingly more retail customers. I believe a player like Easy Equities has more than 1-million retail accounts. Growth in the SA economy, with subsequent company profit growth, is the best advertisement, but the JSE has no influence over this,” Armitage said.
The local bourse has embarked on initiatives to grow the number of listings in the equity market. It recently announced amendments to its listing requirements to cut red tape. The amendments are aimed at improving the JSE’s competitiveness and making it more efficient, fair, transparent and attractive to issuers and investors.
Andrew Bahlmann, CEO of corporate advisory firm Deal Leaders International, said the JSE has 18% fewer listings than it did seven years ago.
Delistings from public markets are a global phenomenon, and the trend has been visible for a decade with stock markets worldwide shrinking as severely as the JSE, if not worse.
“The Luxembourg bourse has 55% fewer listings, the Deutsche Börse 36%, the Swiss 22%, and the London Stock Exchange 21%,” Bahlmann said.
Meanwhile, beverage giant Coca-Cola is playing wait and see, further delaying its plans to list on the local bourse, saying the listing would depend on improved market conditions.
“Once market conditions become more favourable, the company intends to list Coca-Cola Beverages Africa (CCBA) as a publicly traded company via an initial public offering, which we believe will occur subsequent to 2023,” a spokesperson said on Friday.
The planned IPO by Coca-Cola was first mooted in April 2021, with the shares to be listed in Amsterdam and Johannesburg. Coca-Cola is said to be targeting a value of $8.1bn, according to Bloomberg.
CCBA is the eighth-largest Coca-Cola bottling partner in the world by revenue and accounts for more than 40% of all Coca-Cola products sold in Africa by volume.
It was formed in July 2016 after the successful combination of the Southern and East African bottling operations of the nonalcoholic ready-to-drink beverages businesses of The Coca-Cola Company, SABMiller and Gutsche Family Investments.
Updated: March 12 2023
This story has been updated with new information.
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