Bidvest looks to spread wings, eyes mega deals

BIDVEST is seeking deals outside its South African home market and could borrow as much as $1-billion (R13.2-billion) for acquisitions after it spun off its food-services unit last year, its chief executive Lindsay Ralphs said.

Ralphs is plotting Bidvest’s next phase of growth after the company spun off Bid Corp, which is about 40% larger by market capitalisation at R80-billion. 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, he said.

There were a “couple of processes taking place” related to potential acquisitions, with expansion in the UK a possibility, Ralphs said in an interview at Bloomberg’s Johannesburg office 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,” said Ralphs. Money would be borrowed outside SA, with overseas purchases serving to hedge against volatility in the rand, he said. The currency lost 45% of its value against the dollar in the three years to the end of 2015 before gaining 13% last year.

Other South African companies are expanding in international markets to counter an unpredictable local currency and 2016 economic growth that the Reserve 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 car-to-logistics firm Imperial Holdings have substantial foreign operations.

The spin-off 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.

Ralphs replaced Brian Joffe, who founded the company in 1988 and retired as CEO when Bid Corp was separated in May.

Joffe remains a nonexecutive director of Bidvest and is chairman of Bid Corp. — BloombergBDLive