Johannesburg - Bidvest Group is seeking deals outside its
South African home market and could borrow as much as $1 billion for
acquisitions after it spun off its food-services unit last year, its chief
executive officer said.
Lindsay Ralphs, the CEO, is plotting Bidvest’s next phase
of growth after the Johannesburg-based company spun off Bid Corp, which is
about 40 percent larger by market capitalization at 80 billion rand ($6
billion). Now operating a mix of mostly South African businesses ranging from
cleaning, security and freight-services to car rental and plumbing supplies,
Bidvest sees its scope for local acquisitions as limited, the CEO said.
There are a “couple of processes taking place” related to
potential acquisitions, with expansion in the UK a possibility, Ralphs, 61,
said in an interview at Bloomberg’s Johannesburg office on Tuesday. Any deal
would be in an industry in which Bidvest already operates and the company would
want to be a major competitor in any new market, he said.
“It probably reduces down to three, four or five
significant industries that are simple and sometimes even below the radar,”
said Ralphs. Money would be borrowed outside South Africa, with overseas
purchases serving to hedge against volatility in the rand, he said. The
currency lost 45 percent of its value against the dollar in the three years
through 2015 before gaining 13 percent last year.
Read also: Bidvest grows profits in tough market conditions
Other South African companies are expanding in
international markets to counter an unpredictable local currency and 2016
economic growth that the central bank said was likely to have been the slowest
in seven years. Clothing retailer The Foschini Group and investment company
Brait have bought firms in the UK, while Bid Corp and auto-to-logistics firm
Imperial Holdings have substantial foreign operations.
The spin off has been a success for the new Bidvest,
Ralphs said. Previously, cash generated by the company was largely put toward
growing the food-services unit. The split frees up funds for growing the
remaining businesses.
Ralphs replaced Brian Joffe, who founded the company in
1988 and retired as CEO when Bid Corp was separated in May. Joffe remains a
non-executive director of Bidvest and is chairman of Bid Corp.
After adjusting historical pricing to reflect the spin
off, Bidvest has gained 63 percent in the past 12 months, according to data
compiled by Bloomberg, making it the third-best performer on the FTSE/JSE Top40
Index and the top non-mining stock. Without the historical adjustment, Bidvest
has declined 49 percent.
-With assistance
from Antony Sguazzin, John Bowker and Gordon Bell.