Bloomberg
BIDVEST Group’s listing of its international food services unit in London might provide cheaper funding to expand into new markets, including the US, the company said yesterday.
“It has been quite complicated to continue to fund significant acquisitions abroad out of the South African balance sheet,” chief executive Brian Joffe said. “Management are quite keen, having now expanded into Europe [and] South America, to potentially get involved in the US.”
Bidvest has businesses ranging from food services to pharmaceuticals, with South Africa as its main market.
Acquisitions added R7.2 billion in sales last year. The company is evaluating a stock sale in London for its food-service unit as investor interest grows after deals in the UK and Italy.
Joffe said the funds involved to pursue an acquisition in the US were “quite significant”.
Roy Mutooni, an analyst with Renaissance Capital, said a listing in London would unlock value for shareholders and was an opportunity to incentivise management.
“The company has posted a solid performance both locally and internationally in the year ended June despite the R1bn write-down at Adcock Ingram. I think the consideration of a listing in London would strengthen the company,” he said.
For the year to June, trading profit advanced 16.6 percent to R8.9bn, Bidvest said yesterday. Turnover rose 19.7 percent to R183.6bn, of which food services ranging from distribution to ingredient manufacturing accounted for more than half.
“The prospects for the group remain positive, supported by the anticipated benefits arising from the significant acquisitions and investments made over the past year,” it said. “In South Africa, trading conditions are expected to remain tough, compounded by the impacts of a rising interest rate climate, its impact on consumer demand and low economic growth.”
Shares rose as much as 2.7 percent, the steepest intraday climb in five months, and closed 2.5 percent up at R288.34 on the JSE. – Additional reporting by Dineo Faku