PSG’S PALADIN WANTS 100% OF CIC
PALADIN CAPITAL, the private equity specialist controlled by PSG, is looking to buy out Namibian services group CIC Holdings. At the launch of Paladin in Stellenbosch last month, the group disclosed a 52% stake in CIC, which has been listed on the Namibian Stock Exchange (NSE) since 1996.
However, Paladin CEO Pierre Malan confirms Paladin’s stake has been bolstered to 63% in recent weeks and that an offer – pitched at 45c/share – had been extended to minority shareholders. The proposed buyout values CIC at around R100m.
Basically, CIC is a holding company for a collection of businesses operating in the fast moving consumer goods (FMGC) industry in southern Africa. Services – which generate turnover of around R1,2bn/year – include selling, merchandising, warehousing, distribution, debtors’ administration and staffing solutions.
CIC has endured a rocky ride on the NSE lately, with profitability falling off markedly. But if CIC can again hit the levels of profitability seen in 2003 – when R25m or 14c/ share was earned at bottom line – a successful buyout effort could prove very rewarding for Paladin.
Gut feel is that Paladin may be buying into CIC just ahead of a significant up-tick in the business, which may irk some shareholders faced with the buyout offer.
On paper, it looks like Paladin’s getting a bargain. CIC’s latest net asset value is stated as 71c/share, though CEO Trevor Rogers says that a recent “fair value” calculation suggested the share was worth between 45c and 51c.
The problem for any resistant minorities is that NSE regulations will allow Paladin to delist CIC even if they don’t get 100% support for their offer.
Malan says Paladin wants to delist CIC. “We have written to shareholders – and that’s exactly what we’ve told them.”
Rogers says CIC executives are not yet aware of any shareholders who are opposed to Paladin’s buyout offer, though Finweek has picked up initial grumblings.
Though the CIC shares are illiquid, Rogers acknowledges that shares have been changing hands lately – adding that top asset manager Allan Gray had reportedly taken a stake in the business.
An offer to minorities. Pierre Malan