Distell eyes growth potential
Speaking after Distell’s re-listing on the JSE on Friday, Rushton said there was massive potential for growth in the rest of Africa where the company’s brands were under represented in many economies.
“For us, there is enormous headroom for growth, as consumers are given more choices beyond beer. We want to target those opportunities in the medium-term for our business,” said Rushton.
Distell has, for a while now, been pursuing growth in the rest of Africa. The pursuit of the growth opportunities would require capital, he said.
Current investments were financed through the company’s balance sheet. “Our debt levels are low. So we are able to do that. We do look at much larger transformational acquisitions. That is constantly on our agenda and in our horizon being an ambitious South African company. If there is a need for a capital raise for a much larger transactions, we have a very supportive shareholder base,” said Rushton.
He said priority markets in which Distell sought growth included Angola, Nigeria, Tanzania and Kenya. He said the company was also eyeing opportunities in Zimbabwe.
“We are looking forward to a rebound and better times in Zimbabwe and we would like to follow the growth in that economy,” said Rushton.
He said in pursuit of the growth, the company would exercise capital discipline in the search for growth.
The growth ambitions were at the centre of Distell’s move to re-list on the JSE. According to Distell, the re-listing gave shareholders a single point of entry to investing in Distell, in contrast to the previous multi-tiered ownership structure.
Distell has implemented the restructuring through a new entity called Distell Group Holdings Limited, which has listed on the JSE’s main board.
In the collapsed structure, the Remgro Group and Capevin each held 50percent in an entity called Remgro-Capevin Investments (RCI) and RCI held 52.8percent of the Distell shares. The 50percent interest in RCI was Capevin’s only asset. The Public Investment Corporation (PIC) owned 28percent of the Distell shares.
Following the re-listing, investment holding company Remgro would remain a shareholder of reference with a 31.4percent economic interest in the company, alongside key institutions such as the PIC and Coronation Fund Managers, Distell said on Friday.
The restructuring would simplify Distell’s capital structure and likely improve the company’s investment appeal to both foreign and local investors.
“Over a long period of time, our shareholders had asked us to collapse the multi-tiered structure of Capevin particularly.
"Capevin historically was about 14percent discount to Distell, which was its only single investment,” Rushton said.
He said that the restructuring, which was supported by 99.9percent of Distell shareholders, allowed investors to have a single point of entry into the Distell stock.
“As a result of the listing, our free float in the Distell share doubles from 19.5percent to 37.5percent. With more liquidity in our stock, we hope that will have a beneficial impact on our share price over time and that more tracker funds will start to track the Distell shares. It will also give us more flexibility as a company and speed to pursue our growth ambition should we want to raise capital,” said Rushton.
Rushton on Friday said the simplification of the Distell shareholding structure should improve the company’s ability to raise additional capital in the future, if required, to fund the company’s growth ambitions.
He said in the previous structure, there was a holding structure which did not serve a lot of purpose.
“If we were pursuing a large acquisition, we had to go through two groups of shareholders to get approval. Now this will not be the case. We will go through one body of shareholders to pursue those growth ambitions,” he said.
Distell shares closed 1.31percent higher on the JSE on Friday at R128.
- BUSINESS REPORT