Brait raises enough for debt, new investments

THE problem for Brait is no longer finding cash to acquire businesses but how to spend it wisely, according to CEO John Gnodde, who yesterday praised investors for showing faith in the group’s investment strategy.

He was speaking after Brait raised more than R2bn from a private placement of shares, even though it was looking for only about R1.5bn.

Mr Gnodde said Brait was pleased with the oversubscription of the private placement, which would enable the company to pay debt and still have enough cash to fund new investments.

“We are very pleased with the interest shown in the preference shares, depicted by applications in excess of R2bn. The proceeds will be largely used to pay down existing facilities, after which Brait will be sitting in a net cash position, which, taken with our undrawn facilities, will enable Brait to invest in excess of R2.5bn into new opportunities,” he said.

Mr Gnodde is keeping his cards close to his chest about whether he has targeted investments in sight. He said Brait wanted to invest in a quality deal and at the right time. “Brait is constantly evaluating a number of investment opportunities, and will update the market as any single opportunity becomes definitive.

“It is not the number of deals that counts, but rather the quality — so we focus on doing the right deal at the right time.”

Mr Gnodde said a key ingredient for success for Brait was to select entrepreneurs and management teams in businesses that occupied a unique market position in their sector. Brait preferred to invest in privately held companies that had or demonstrated strong cash-flow generation and were exposed to growth sectors such as consumer and retail.

Brait is not restricting itself to the South African market as evidenced by its recent acquisition of a stake in UK-based frozen food retailer Iceland Foods.