Bid­vest looks out for for­eign deals

The Star Early Edition - - COMPANIES - Jan­ice Kew and Liezel Hill

BID­VEST Group was seek­ing deals out­side South African and could bor­row as much as $1 bil­lion (R13.3bn) for ac­qui­si­tions af­ter it spun off its food-ser­vices unit last year, its chief ex­ec­u­tive said.

Chief ex­ec­u­tive Lind­say Ralphs is plot­ting Bid­vest’s next phase of growth af­ter the com­pany spun off Bid Corp, which is about 40 per­cent larger by mar­ket cap­i­tal­i­sa­tion at R80bn. Now oper­at­ing a mix of mostly South African busi­nesses, rang­ing from clean­ing, se­cu­rity and freight ser­vices to car rental and plumb­ing sup­plies, Bid­vest saw its scope for lo­cal ac­qui­si­tions as lim­ited, Ralphs said.

There were a “cou­ple of pro­cesses tak­ing place” re­lated to po­ten­tial ac­qui­si­tions, with ex­pan­sion in the UK a pos­si­bil­ity, Ralphs said on Tues­day. Any deal would be in an in­dus­try in which Bid­vest al­ready op­er­ated and the com­pany would want to be a ma­jor com­peti­tor in any new mar­ket, he said.

“It prob­a­bly re­duces down to three, four or five sig­nif­i­cant in­dus­tries that are sim­ple and some­times even be­low the radar,” Ralphs said. Money would be bor­rowed out­side South Africa, with over­seas pur­chases serv­ing to hedge against volatil­ity in the rand.

Other South African com­pa­nies are ex­pand­ing in­ter­na­tion­ally to counter an un­pre­dictable rand and 2016 eco­nomic growth that the cen­tral bank said was likely to have been the slow­est in seven years. Cloth­ing re­tailer The Fos­chini Group and in­vest­ment com­pany Brait have bought firms in the UK, while Bid Corp and Im­pe­rial Hold­ings have sub­stan­tial for­eign op­er­a­tions.

Funds freed up

The spinoff had been a suc­cess for the new Bid­vest, Ralphs said. Pre­vi­ously, cash gen­er­ated by the com­pany was largely put to­wards grow­ing the food-ser­vices unit. The split frees up funds for grow­ing the re­main­ing busi­nesses. Bid­vest may also tap cash by sell­ing non-core as­sets, such as its Namib­ian fish­ing unit.

Ralphs re­placed Brian Joffe, who founded the com­pany in 1988 and re­tired as chief ex­ec­u­tive when Bid Corp split off in May. Joffe re­mains a non-ex­ec­u­tive di­rec­tor of Bid­vest and is chair­man of Bid Corp.

Bid­vest shares fell 0.18 per­cent to close at R169.20 on the JSE yes­ter­day.

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