LOUB­SER HOPES THE EDCONS WILL COME BACK TO THE MAR­KET

Finweek English Edition - - Creating wealth -

JSE PRES­I­DENT RUS­SELL LOUB­SER is, for ob­vi­ous rea­sons, not happy about the dis­ap­pear­ance of Ed­con and other ma­jor com­pa­nies from the stock ex­change. But he be­lieves it’s very likely that they’ll even­tu­ally re­turn – once they’ve been “spruced up”.

Private eq­uity transac- tions usu­ally aim at pe­ri­ods of three to seven years, and it must be re­mem­bered that the in­vestors in­volved want good re­turns. An ef­fec­tive way of achiev­ing that is by relist­ing, Loub­ser says.

Loub­ser is sup­ported in his view by re­search in the US, where it’s been shown that com­pa­nies that have been “spruced up” fare bet­ter on the stock mar­ket than new list­ings. The im­por­tant point is not to pay too much ini­tially. How­ever, with so many private eq­uity groups ap­pear­ing on the scene, com­pe­ti­tion will also in­crease. That will mean bet­ter buy-out prices – but also lower the profit po­ten­tial for in­vestors. ¤

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