Bidvest looks out for foreign deals

BIDVEST Group was seeking deals outside South African and could borrow as much as $1 billion (R13.3bn) for acquisitions after it spun off its food-services unit last year, its chief executive said.

Chief executive Lindsay Ralphs is plotting Bidvest’s next phase of growth after the company spun off Bid Corp, which is about 40 percent larger by market capitalisation at R80bn. Now operating a mix of mostly South African businesses, ranging from cleaning, security and freight services to car rental and plumbing supplies, Bidvest saw its scope for local acquisitions as limited, Ralphs said.

There were a “couple of processes taking place” related to potential acquisitions, with expansion in the UK a possibility, Ralphs said on Tuesday. Any deal would be in an industry in which Bidvest already operated and the company would want to be a major competitor in any new market, he said.

“It probably reduces down to three, four or five significant industries that are simple and sometimes even below the radar,” Ralphs said. Money would be borrowed outside South Africa, with overseas purchases serving to hedge against volatility in the rand.

Other South African companies are expanding internationally to counter an unpredictable rand and 2016 economic growth that the central bank said was likely to have been the slowest in seven years. Clothing retailer The Foschini Group and investment company Brait have bought firms in the UK, while Bid Corp and Imperial Holdings have substantial foreign operations.

Funds freed up

The spinoff had been a success for the new Bidvest, Ralphs said. Previously, cash generated by the company was largely put towards growing the food-services unit. The split frees up funds for growing the remaining businesses. Bidvest may also tap cash by selling non-core assets, such as its Namibian fishing unit.

Ralphs replaced Brian Joffe, who founded the company in 1988 and retired as chief executive when Bid Corp split off in May. Joffe remains a non-executive director of Bidvest and is chairman of Bid Corp.

Bidvest shares fell 0.18 percent to close at R169.20 on the JSE yesterday. – Bloomberg