Invicta’s new global structure

Industrial supplies conglomerate Invicta Holdings is laying the groundwork for a muchanticipated offshore listing by proposing a new global structure to cater to its international expansion ambitions.

Industrial supplies conglomerate Invicta Holdings is laying the groundwork for a much-anticipated offshore listing by proposing a new global structure to cater to its international expansion ambitions.

A business update issued on Wednesday indicated Invicta would create a new public company — Invicta Global — that would be domiciled in the UK.

The market initially appreciated the development, adding more than 3% to Invicta’s shares. However, positive sentiment dissipated and the share finished unchanged at R35.

Invicta said the rationale for the new offshore structure followed recent comments made at the release of year to end March results when the group reiterated ambitions to eventually list on an international stock exchange, in addition to its listing on the JSE.

Invicta said the creation of an international holding company listed on the JSE would place the group in a better position to raise offshore funding to hedge its exposure to future offshore acquisitions. “The board believes that this is a prudent step to ensure sustainability and growth of the group as it embarks on the next phase of growth,” the company said.

Invicta stressed it would still look for appropriate acquisitions in SA and in existing markets.

The mechanism for the proposed restructuring will see Invicta Global acquiring all the issued shares in Invicta Holdings in exchange for new Invicta Global scrip. Existing Invicta ordinary and preference shareholders would receive one Invicta Global ordinary and preference share, respectively, for each Invicta ordinary and preference share held. The biggest shareholder in Invicta is retail tycoon Christo Wiese.

The development would also see the delisting of the existing Invicta listing to pave the way for the primary listing of Invicta Global on the JSE.

Invicta stressed that an international listing would not form part of the proposed transaction and that Invicta Global would for the foreseeable future remain listed on the JSE only.

“With the structure in place … Invicta Global will be able to list on an international exchange in the future should it be commercially appropriate or opportune at that time,” the group noted.

Invicta indicated it had already started engaging with the relevant regulators, and that conditional approval had been received from the Reserve Bank. Invicta earns the bulk of its keep from South African operations but has an offshore foothold in the Far East via Singaporebased capital equipment distributor Kian Ann.

Invicta has previously set a 2020 target of annual revenues of R25bn — of which half would be sourced from international markets. Invicta generated R9.6bn in revenue in the year to end March 2018.

Electus Fund Managers cohead Neil Brown argued that it would be preferable for Invicta to get its local businesses operating well before making small global acquisitions.

Vunani Securities analyst Anthony Clark said these developments were somewhat surprising after previous indications about seeking an offshore listing — possibly in Bermuda.

Clark said the fact that London remained the capital market of the world suggested Invicta believed it could raise capital in that market.