Long4Life will embrace the philosophy that uplifted Bidvest
When Long4Life chairman Brian Joffe presented the first set of interim results of his new company to investors last week, he made it clear he wasn’t going to present numbers. “If you don’t understand ‘interest received’ you’re at the wrong place, ’’ he said.
Dressed in blue jeans and a bright blue jacket, Joffe delivered a blunt, entertaining presentation during which he only once named names from his old life — the one in which he built up Bidvest/Bidcorp from the R8m of capital with which he began the company in the 1980s to the combined total of R160bn at which the market values Bidcorp and Bidvest now. But the philosophy of his new venture is to go down the road of the same methodology by which he created the previous company, he says. And it is Joffe’s track record and methodology that investors in Long4Life are backing.
But where Bidvest was founded on rather unglamorous corporate services companies in areas such as catering supplies and office cleaning, this time Joffe has gone from businesses that clean toilets to ones that clean faces, as it were – the focus is on recession-proof, “lifestyle” areas such as beauty salons and sports gear supplies.
The plan is also to take advantage of opportunities arising out of the increasing number of people who retire at 60 with money to spend.
Last week’s event was the first real launch of the company. It has now finalised the three acquisitions that will provide the building blocks for its three areas of activity, after some typically Joffe-style haggling over due-diligence issues and pricing. Sorbet is the basis on which it will build a personal care and wellness business; at Holdsport (which owns Sportsmans Warehouse among others), four new sports and recreation businesses have been created and will be expanded; while newly acquired Inhle is a strategic asset which is SA’s largest beverage co-packing business and which Long4Life plans to leverage into the leisure space. Anyone for Sorbet-branded bottled water?
Long4Life, which listed in March, is a start-up, Joffe emphasises, referring to the challenges of starting from scratch, getting telephone lines, VAT numbers and so on. The World Bank’s latest survey, which shows it takes 45 days to set up a business in SA against less than 20 days in most other countries, will surely resonate at Long4Life, even though with R2bn of initial capital (including R100m Joffe put in himself) it wasn’t your basic start-up.
Joffe and his backers are by no means the only successful and wealthy South Africans putting money into buying promising entrepreneurial businesses that can be scaled up and grown organically. But many of those private equity players and venture capital funds are unlisted. What’s relatively unusual about Joffe’s new start-up is that it is listed from the start, so can use equity to make acquisitions.
Scale is a big reason for being listed rather than unlisted: it is a critical part of building a big business, Joffe says. The company’s market value is already more than double its initial R2bn, though it’s off the peak it hit before the premature departure of Kevin Hedderwick. Joffe wants to build that up quickly to R10bn. Being listed gives the company the ability to attract targets whose vendors want to “hedge their bets by taking cash off the table and working with us”, he says.
Following the acquisitions it still has R1.6bn in cash and can take its war chest up to R2.5bn.
When Long4Life reports its February full-year results there will be more to talk about than just the interest received line of the income statement, and markets will have to give it a full year at least, to February 2019, to start seeing whether this is a new Bidvest in the making.