Steinhoff Africa ‘is a keeper’

Steinhoff Africa Retail is set to list on the JSE on Wednesday at R20.50 a share, the midpoint of the range tipped by management in its prelisting statement.

Steinhoff Africa Retail (Star) will list on the JSE on Wednesday at R20.50 a share, the mid-point of the range tipped by management in its prelisting statement.

Analysts said the R20.50 at which 750-million shares were placed in the bookbuild exercise was on the expensive side.

It is equivalent to a price-toearnings rating of about 21 times and points to a market capitalisation of R70.7bn for Star.

The success of the bookbuild exercise, which was five times oversubscribed, suggests there will be few sellers when trading starts on Wednesday.

“Very few of those who have acquired shares in the bookbuild will be sellers. People have bought this share to keep,” said analyst Syd Vianello.

Star will give investors a rare opportunity to invest in a panAfrican retail operator.

“It is the only company that can offer this quality access to African retail, so it won’t come cheap,” Vianello said.

The offering includes apparel chains Pepkor and Ackermans and grocery retailer Shoprite. While these are the group’s top performers, analysts say its previously struggling furniture outlets have been turned around and are performing well.

There is growing speculation the deal could eventually result in Shoprite selling its OK furniture operations to Steinhoff.

The 750-million share placement includes 302-million placed on a preferential basis with black economic empowerment group Lancaster, which is led by former trade unionist Jayendra Naidoo. Naidoo has been appointed Star chairman.

The share is expected to be tightly held, with Steinhoff International holding about 78.3% and Lancaster unlikely to sell any of its 8.8%. This will leave a free float of about 12%.

THE SUCCESS OF THE BOOKBUILD EXERCISE … SUGGESTS THERE WILL BE FEW SELLERS … ON WEDNESDAY

Steinhoff International, which is the biggest furniture retailer in the world after Ikea, has operations stretching from the US to Europe to Australia.

Star’s estimated market capitalisation of R70bn will make it the second-largest retail company on the JSE, beaten only by Shoprite, which has a market capitalisation of a hefty R124bn.

The other JSE-listed retailer with extensive international operations, Woolworths, has a market capitalisation of R63bn.