Brait closes its R1bn capital-raising programme
BRAIT’s initial capital-raising programme, in which the investment holding company was expected to have raised up to R1bn for its war chest in order to fund acquisitions, closed yesterday.
The amount is to be raised by issuing preference shares at R100 each to investors subscribing for at least R1m.
“The minimum amount of R1bn has been underwritten by Rand Merchant Bank, being the arranger and underwriter, on the basis of the arranger and underwriter preplacing R785m with selected qualifying investors, which include the Titan Group,” Brait said.
Titan is owned by Brait’s 33% anchor shareholder billionaire investor Christo Wiese.
In its pre-listing statement, Brait said the initial plan was to raise up to R1,5bn over a period of 18 months with the potential to increase this to R2bn depending on investor appetite. The issue comes a year after Brait raised nearly R6bn via a rights issue and private placement for acquisitions.
Brait said
using
preference shares to raise capital had several advantages, including avoiding diluting existing shareholdings and also providing a more stable and less costly source of funding.
JSE-listed group PSG, which is invested in such growth companies as Capitec Bank, also favours perpetual preference shares to fund its acquisitive growth.
Brait shareholders last week approved the creation of up to 20million preference shares to raise the additional capital. The group, which first listed on the JSE in 1998, is now incorporated under Maltese law and registered as a European company and maintains its primary listing on the Luxembourg Stock Exchange.
It has since dropped its private equity model and become an investment group buying stakes in mostly unlisted companies.
It has also reorganised its structure to operate as a European company. This was why it had adopted the model of having a board of only nonexecutive directors to whom its investment team, led by CEO John Gnodde, reported. Brait said the nonexecutive directors acted “as the de facto independent investment committee” for the group.
“The Brait SA investment team reports to the Brait (Luxembourg) board, with the latter having the final say on all investment-related decisions for the group,” Brait said.
“This structure was approved by 96% or so of our shareholders at the extraordinary general meeting (in May 2011) as it provides the requisite safeguards for an investment company model,” the group said.
Shareholder activist Theo Botha said yesterday the structure was similar to that used by listed European companies. “I do not know whether it is a good thing or not but it seems to work for European companies”.