Steinhoff has long wanted to shift its listing
IT HAS long been the intention of furniture and household goods maker Steinhoff to list in a market that represents most of its customers, and to put in place long-term incentives for management.
And this week, German weekly magazine wirtschaftswoche reported that Steinhoff was considering an initial public offering in Frankfurt in the European autumn, with proceeds from the listing to be used to pay debts and fund expansion. The paper quoted financial sources, but the company declined to comment.
The group is the second-largest household goods company in Europe, and owns France’s Conforama and the UK’s Harveys.
Analysts said a European listing was highly complex. The company had to weigh up exchange-control requirements and tax regulations.
“There’s a lot to work through before they can decide,” said Evan Walker, a portfolio manager at 36ONE Asset Management.
Steinhoff had done several acquisitions to give it the scale to be a global player.
“They are conscious of the fact that they need to have an incentivised management team that can take it forward for the next five to 10 years,” said Walker.
Walker said Steinhoff had long spoken of listing in Europe, but had not disclosed if it would be a primary or secondary listing.
“I don’t know how the Reserve Bank will look at it.”
Walker did not expect a delisting in South Africa.
European management did not want its assets caught up in a depreciating currency, so it needed to put long-term incentives in place for management, said Walker.
They would be close to the customer base and employees, and would be able to raise money at a better cost.
“That’s always been Markus Jooste’s long-term intention.”
France is the largest contributor to the group, and Conforama contributes over à3- billion a year. It is also very large in Italy, Spain, Germany and Switzerland.
The group’s two largest shareholders are the PIC and Investec, each holding about 12%.
Rob Forsyth, head of industrial equity research at Investec Asset Management, said the company had been talking about a potential listing for about three years, and the timing was fairly opportune.
“If you look at retail shares in Europe, they did well last year, and they are trading at substantial premiums to Steinhoff,” he said.
Steinhoff has a diversified European exposure at a time when Europe is improving slightly and European sales growth is starting to accelerate.
“So from that perspective we would favour a European listing. We think the share is substantially undervalued compared to European retail shares.”
Forsyth said it was strange having predominantly European operations listed in emerging markets.
Steinhoff now holds 86% in JD Group up from 56%, following an offer to acquire up to 98%.