Banks score R180m in listing
Six investment banks, acting as global coordinators and bookrunners, will be paid at least R180 million for their work in the unbundling of Steinhoff Africa Retail (Star) from Steinhoff International. Star lists on the JSE tomorrow.
The banks – RMB, Investec, Citi and Morgan Stanley as joint global coordinators, and JP Morgan and Standard Bank as joint bookrunners – raised R15.4 billion through Star’s private placement. The price achieved, R20.50 per share, is exactly the midpoint of the proposed pricing range of R18 to R23 and values the company at R70.7 billion.
It’s not clear how much Star will be paying the banks, nor what the split will be. This limited disclosure is questionable.
Based on the published amounts, it seems the banks will share R181.2 million, or 1.21% of the original R15 billion it anticipated raising. Given that the lower range of the estimate provided by Star is 1.25% of capital raised, one can assume the banks will be paid R192.5 million. While the split may never be known, it’s not inconceivable that the four joint global coordinators will be paid about R40 million each, with the two joint bookrunners netting around R20 million each.
Citi may end up with the biggest payment as it’s also acting as the stabilisation manager in the listing.
As part of the listing, BEE vehicle Lancaster subscribed for 40% of the shares on offer at a value of R6.2 billion.
Therefore, the banks arguably only raised R9.2 billion through the process, which Star said was “4.8 times oversubscribed”.
Star says total expenses are expected to “amount to approximately R226 million” (all amounts exclude VAT), with the bulk of these going to the six investment banks. It has set aside R11.9 million as a “contingency”, with another R6 million earmarked for “other (including competition authorities and competition lawyers)”.
Lawyers will be paid a total of R16.7 million, with more than half (R9 million) going to Linklaters as “international legal advisor to the company” and R4.6 million being paid to Freshfields as “international legal advisor to joint global coordinators”.
The JSE will be paid R3.2 million in listing and document inspection fees and PSG Capital will net R2.5 million in its role as transaction and corporate sponsor.