Libstar’s prelisting price confirms a muted taste for sector

Household brands distributor Libstar has raised R1.5bn in fresh capital ahead of its listing on the JSE later this week.

Libstar – which owns brands like Lancewood, Goldcrest, Cape Herb and Denny — placed 243.5-million shares at R12.50 each. The offer comprised the issuing of 120-million new shares as well as a concurrent offer to sell 123-million shares belonging to existing shareholders, most notably global investment company Abraaj.

Market enthusiasm seemed slightly muted, with the shares placed at the lower end of the indicative range, which Libstar had set at between R12.50 per share and R16 per share.

Libstar had previously advised that the net proceeds raised in the prelisting share placement would be earmarked for repaying a portion of debt to create more flexibility to pursue acquisitions and drive internal growth strategies.

The successful capital raising does reinforce sentiment for the JSE’s jittery consumer sector after glass packaging giant Consol called off its proposed capital raising and listing last week after unmet pricing ambitions.

Libstar’s prelisting statement showed revenue of R8.8bn and operating profit of R594m in the financial year ending December 2017. Cash flow from operations was R573m. The prelisting document also revealed that Libstar had declared a pre-initial public offer dividend of R800m.

Aside from its own brands, Libstar holds rights to distribute and manufacture other local and international brands such as Tabasco, Kikkoman, Olitalia, Kiri, Bel, Laughing Cow, Lurpak, Act II, Maille and Villani.

It also has lucrative agreements to supply dealer own brands and private label brands to retailers like Woolworths, Shoprite Checkers, Pick n Pay and Spar. Libstar disclosed that sales generated from the manufacture of dealer own brands and private label products comprised 42% of the overall revenue in 2017.

The prelisting documentation highlighted the company’s success in identifying industry trends and accessing innovative product categories.

Libstar’s Amaro Foods produces flour tortilla wraps and gluten-free baked goods; Ambassador Foods makes healthy nut snacks; and Montagu Foods supplies a range of chutneys under dealer own brands for Pick n Pay and Private Label for Shoprite Checkers. Its Finlar Fine Foods has developed a Cajun chicken burger patty for McDonald’s.