LOUBSER HOPES THE EDCONS WILL COME BACK TO THE MARKET
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. ¤