Steinhoff makes Star debut on the JSE

STEINHOFF Africa Retail (Star) shares jumped 8 percent immediately after its debut on the JSE.

The share price leapt to R22.50 yesterday morning, up from its opening price of R20.50, taking Star’s market capitalisation to R75 billion and placing the retail giant among the top 40 companies on the JSE.

Chief executive Ben la Grange said he was happy about the proceedings and the company was well received by investors.

“It is business as usual for the group. We have 16 retail brands in our portfolio and it is certainly a busy time for us as we operate throughout the continent,” La Grange added.

Star, with brands such as Pep, Ackermans, Bradlows, Poco and HiFi Corporation is the 14th company to list on the JSE this year.

The group offered just more than 23 percent of its shares in a private placement to investors. Rand Merchant Bank, Investec, Citi and Morgan Stanley acted as joint global co-ordinators, with JP Morgan and Standard Bank as the joint book runners.

Oversubscribed

Michael Treherne, a portfolio manager at Vestact, said so far so good for Steinhoff.

“The Star stock is up around 8 percent today. Given that the listing was seven-times oversubscribed, it is not surprising. With the listing of Star, we know what Steinhoff ’s African assets are worth. International investors need to update their valuation models to reflect this value,” Treherne said.

La Grange said Star had an already established footprint on the continent with more than 4 800 retail stores in 12 African countries.

“We are going to service the customers that we have already. We are not planning to roll out any new stores soon as we are already invested in the existing portfolio. However, we do not rule out the possibility of getting into new territories later,” Le Grange added.

Star has annual sales of R53 billion and is 78 percent owned by Steinhoff International. The retail sector in South Africa has been under pressure with subdued consumer spending, but Star said it could navigate through these challenges and succeed.

“We ensure that you can still find bargains in our stores that will draw our customers.

“We offer low prices to the customers and that makes it easy to increase head count,” La Grange said.