Johannesburg - Rhodes Food fell on its first day of trade in Johannesburg after the South African producer of prepared meals and canned goods raised 1.2 billion rand by selling shares.
The stock declined 1.7 percent to 11.61 rand with 5.9 million shares traded by 12:49 pm, giving the company a market value of 2.6 billion rand.
The producer sold shares at 12 rand each in its initial placement last month.
Rhodes Food, based in Groot Drakenstein in the Western Cape province, owns brands including Rhodes, Magpie, Bull Brand and Hazeldene.
It has exclusive arrangements with Woolworths, a South African food and clothing retailer, to provide ready-made meals and to supply Ayrshire dairy products in the Western Cape and Eastern Cape.
The nature of Rhodes’ products and the fact that the company exports some of its output expose it to currency risks and volatile commodity prices, Jiten Bechoo, an analyst at Avior Capital Markets, said by phone from Cape Town.
“In good times you have the benefit of the weaker rand for their exports, but that kind of leverage always works both ways,” Bechoo said.
The rand gained 0.5 percent to 11.2050 per dollar, paring losses to 25 percent against the US currency since the beginning of last year, the worst performance among 16 major currencies tracked by Bloomberg.
The listing will help Rhodes grow and “create financial capacity for selective acquisitions,” it said in a September 15 statement. - Bloomberg News