Steinhoff values Star at R70.73bn
STEINHOFF International on Friday priced the initial public offering for its African unit, Steinhoff Africa Retail (Star) at R70.73 billion.
The market capitalisation is based on a total of 3.45 billion shares in issue at the settlement date, which is September 20.
Steinhoff International and its subsidiaries will hold 2.7 billion shares representing 78.26 percent of the total issued shares immediately after the listing.
Steinhoff is the world’s second biggest furniture retailer after IKEA and it has made important acquisitions internationally in the past year by adding US company Mattress Firm and UK’s Poundland to its stable.
Steinhoff spent $3.8bn (R50bn) on Mattress Firm acquisition as well as £610 million (R10.9bn) for Poundland.
It also paid A$361m (R3.8bn) on Australia’s Fantastic Holdings.
The retail giant said that the split between emerging and developed market retail businesses would allow investors keen on exposure to Africa to invest directly in Star.
The acquisitions have delivered good returns.
Two weeks ago Steinhoff reported 48 percent increase in sales for the nine months to end June to 14.9bn (R234.25bn) for the nine months to end June, boosted by organic sales and the integration and sales development of the acquired businesses.
Significant Star is expected to have 4 808 stores across the sub-Saharan Africa after listing, with a revenue of R29bn and earnings of R3bn in the first six months.
Steinhoff said Star would create a diversified listed-retail company of a significant size and scale with its roots in Africa, and will house all of Steinhoff ’s African retail assets, excluding the automotive division.
Star would give Christo Wiese, the largest shareholder in both Shoprite and Steinhoff, an opportunity to consolidate his holdings.
“The separation of Steinhoff ’s emerging and developed market retail businesses is a natural progression and will allow investors wishing to access the African growth story to invest directly into Star,” the group said.
In the nine months period, the group had generated 52 percent (R7.7bn) of sales in Europe, 27 percent (R4bn) in Africa, 15 percent (R2.2bn) in the US and 6 percent (R1bn) in Australasia.
The group also said an 8.77 percent stake in Star would be allocated to a Black Economic Empowerment (BEE) company in support of the government’s policy.
Star will have annual sales of about R53bn.
Steinhoff shares closed 1.51 percent lower at R62.05 on the JSE on Friday.