Steinhoff International is reviving plans for an initial public offering (IPO) of its European furniture business this year as stock markets recover from the EU economic crisis, people with knowledge of the matter say.
The Johannesburg-based furniture seller, which gets more than half its revenue from Europe, was speaking to banks about a potential share sale, they said, asking not to be identified as the matter was private.
The listing of the European business, which includes the French Conforama chain, could take place on the Frankfurt stock exchange, they said, adding that Steinhoff would retain a majority stake.
The South African company had not yet formally mandated investment banks, and could still decide not to proceed with the listing this year, they said.
“It makes sense,” said Jean Pierre Verster at 36One Asset Management. “An IPO of the furniture business would allow the market to weigh that division on its own. It’s a value-unlocking mechanism.”
A Steinhoff spokeswoman declined to comment.
European markets have rebounded as the region’s largest economies strengthen, the risk of further bailouts recedes, and consumer spending climbs.
On Friday, Steinhoff shares rose 1.5 percent to close at R54.
Markus Jooste, the chief executive, first signalled the possibility of a separate listing in early 2012, before concern about the solvency of some euro zone governments rocked equity markets.
A Frankfurt listing could be used to give Steinhoff more flexibility in future acquisitions, since it would have the option of issuing stock in a market that was more familiar to international investors than the JSE, the people said.
Steinhoff said last week that its financial first-half profit rose 44 percent as consumer spending and market share improved, helped by signs of economic recovery in Europe and a weaker rand against the euro. – Bloomberg