Steinhoff Africa soars on JSE debut
In Africa's biggest IPO this year, Star rockets on its first day of trading, as investors ignore allegations of accounting fraud at its European parent
The listing of Steinhoff Africa Retail (Star) brought some much-needed cheer to the JSE on Wednesday, almost doubling the market capitalisation of the retail sector from R91.5bn to more than R160bn.
The share price briefly peaked at R22.46 but slipped back to end its first day of trading at R21.77.
Within minutes of the opening bell more than 14-million shares changed hands. By the end of the day just more than 69-million shares had traded. Star is the 14th listing to be added to the JSE in 2017.
Its retail chains include Pep, Ackermans, Timbercity, Pennypinchers, HiFi Corp, Incredible Connection and Shoe City. Pep and Ackermans account for the dominant portion of the group’s revenue.
CEO Ben la Grange said he could not confirm when the Shoprite leg of the Star listing would be completed as it first required approval from the competition authorities.
The inclusion of a 26% economic interest in Shoprite, and just more than 50% voting control, is expected to boost Star’s market capitalisation to about R100bn. La Grange described Star as a “fantastic story about growth in SA and Africa”.
He said Steinhoff International’s decision to list its African assets in a separate entity made a lot of sense in terms of the price it had received for the Star shares.
Steinhoff is expected to retain about 76% of Star. In response to speculation of an eventual unbundling of all of its African operations, La Grange, who is also head of finance at Steinhoff International, said the Frankfurt-listed furniture retailer had made it clear it would like to maintain control of the African businesses.
A working group has been set up to identify cross-marketing opportunities within the Shoprite-Star group of businesses. La Grange said the main focus would be on services provided by the various retail chains rather than their products. Many of their customers came into the stores to do money transfers or pay for DStv subscriptions.
He said the combination of Shoprite and Star’s outlets would create huge leverage in the provision of these services.
“We will be able to offer customers more convenience to do what they need to do on a monthly or daily basis.”
Star records 360-million transactions a year but this is dwarfed by Shoprite’s 1.1-billion transactions. He said Star’s chains accounted for 20% of the spending of their customers. That would increase to 70% once Shoprite was included.
Both La Grange and Markus Jooste, CEO of Steinhoff International, refused to entertain any questions on the legal battle between Steinhoff International and former joint venture partner Andreas Siefert.
A Dutch court is due to hear an application from Siefert on Thursday for an investigation into Steinhoff International’s 2016 annual accounts. Siefert claims the accounts do not accurately reflect his minority holding in Conforama, a European-based furniture retailer.
Jooste said earlier he was confident the court would dismiss the application, which was part of a larger legal battle that involved the German authorities.