Consumer-goods manufacturer Libstar aims to raise R1.5bn
The company plans to list on the JSE on May 9
Consumer goods manufacturer and distributor Libstar, which generates nearly R9bn a year in revenue, aims to raise R1.5bn ahead of a planned JSE listing on May 9.
On Tuesday, the company, which owns and holds the licences of an array of household brands and fast-food products, confirmed it would pitch new shares at between R12.50 a share and R16 a share.
The capital-raising exercise would be coupled with proposals to allow certain existing investors to sell down their shareholdings. Libstar’s biggest shareholder is investment group Abraaj, with a 61.55% holding. The Public Investment Corporation (PIC) holds a 16.8% stake.
The prelisting statement showed Libstar generating revenue of R8.8bn and operating profit of R594m in the financial year ended December 2017. Cash flow from operations was R573m.
The statement also revealed that Libstar had declared a pre-initial public offering (IPO) dividend of R800m.
Libstar will slot in next to stalwart JSE food counters such as Tiger Brands, RCL Foods, Pioneer Foods and AV, although market watchers say a comparison to acquisitive Rhodes Food Group was inevitable.
We will obviously be on the lookout for opportunities, but we still have plenty of scope for organic growth
This week, Libstar directors emphasised the company’s diversified offering differentiated the business from other JSE-listed food counters.
Libstar holds an array of strong-selling brands, such as Lancewood (cheeses), Goldcrest (honey), Cape Herb and Spice, Denny (mushrooms and sauces) and Cook ’n Bake, as well as the rights to distribute and manufacture other local and international brands Tabasco, Laughing Cow and Lurpak.
However, the company also has lucrative agreements to supply dealer-own brands and private-label brands to retailers Woolworths, Shoprite Checkers, Pick n Pay and Spar.
Libstar reported that sales from the manufacture of dealer-own brands and private-label products made up 42% of the overall revenue in 2017.
Libstar believed its JSE listing would provide access to additional capital to expand capacity and create additional capabilities in existing production facilities.
The firm has already invested significant capital in its manufacturing infrastructure, and has more than 35 production facilities, more than 200 production and packing lines and more than 75 manufacturing technologies.
Libstar cofounder and financial director Robin Smith said proceeds for the envisaged capital raising would probably be earmarked for enhancing organic growth from existing operations rather than the pursuit of acquisitions.
"We will obviously be on the lookout for opportunities, but we still have plenty of scope for organic growth," he said.
The prelisting documentation highlighted the company’s success in identifying industry trends and accessing innovative product categories.