Brait windfall from Premier
• Private equity firm plans to settle R2.6bn revolving credit facility
Food producer Premier Group — which owns brands such as Blue Ribbon bread and Iwisa maize — plans to list on the main board of the JSE as early as December. Brait, the private equity firm that owns Premier, signalled the intention to float Premier in a stock exchange filing on Monday.
Food producer Premier Group, which owns brands such as Blue Ribbon bread, Iwisa maize and Snowflake flour, plans to list on the main board of the JSE as early as December.
Brait, the private equity firm that owns Premier, signalled the intention to float Premier in a stock-exchange filing on Monday, when it also released results for the six-months to end-September. As an investment firm Brait uses net asset value (NAV) per share as its key financial reporting metric, showing a 0.4% increase in the six-month period to R8.40 a share.
Premier accounts for about 54% of Brait’s total assets and its listing is expected to see the private equity firm rake in about R3.7bn in gross proceeds. Together with the November distribution of R950m, that totals about R4.7bn before fees and expenses.
Brait intends to use the bulk of that cash windfall to settle the roughly R2.6bn outstanding on its revolving credit facility, leaving it with about R2.1bn in cash that it plans to return to shareholders and reinvest in its existing portfolio.
“We absolutely won’t invest in new assets it’ll just be used for optimising the portfolio and returning capital to shareholders,” Peter Hayward-Butt, CEO of Ethos Capital, which manages the Brait portfolio, said in an interview.
“We’ve undertaken to return all the capital to shareholders. That said, would we potentially invest behind good opportunities in the current portfolio? For sure we would but it needs to be balanced against the other alternatives that are available.”
Premier’s initial public offering, which Hayward-Butt said is expected to take place as early as the first week of December, will be done at a proposed price range of R53.82-R67.04 per share. That would give the food producer an expected market capitalisation of between R6.9bn and R8.6bn when it lists under the JSE’s food products sector with the share code PMR.
Brait has already received irrevocable agreements from Christo Wiese’s company, Titan Premier Investments, to purchase 36.2% of Premier’s offered shares with an unnamed institutional investor pledging to take an additional 2.4%. That means 38.6% of Premier’s shares are already effectively allocated.
“Depending on where it prices in the range, we’ll either sell between 43% or up to 54% of our stake,” Hayward-Butt said. “So we will retain a very significant stake, which we intend to unbundle in time to our shareholders in Brait.”
According to the financial information provided in the announcement, Premier increased its revenue 31.6% from the 2020 to the 2022 financial year to R14.5bn, and reported an operating profit of R877m in the latest period.
The listing will not proceed if there is insufficient demand to reach the JSE minimum freefloat requirement of 20%.
Data from DataOrbis, shared by Brait, shows that Premier had almost one-quarter of the market share in bread, almost onethird in flour, one-fifth in maize and close to one-fifth in total sugar-based confectionery in the year end-August.
Its fleet includes 1,059 vehicles — 912 owned by Premier and the rest by third-parties — delivering bread 363 days a year to more than 45,000 customers.
“The transition into the listed environment is expected to support Premier’s efforts to drive its organic and acquisitive growth strategy and strengthen its market position across all business areas,” Premier Group CEO Kobus Gertenbach said.
In most of the markets in which it operates its largest competitors are AVI and Tiger Brands.
Brait’s interim results showed mixed fortunes for the rest of its portfolio, which includes gym chain Virgin Active, UK fashion retailer New Look and other smaller investments. Virgin Active, which makes up about 41% of Brait’s asset base, saw its net asset value decline in the six-month period though it grew its total active membership to 595,000, well above the break even level of 524,000.
New Look, which accounts for 5% of Brait’s assets, grew revenue and earnings despite challenging market conditions in the UK. That was largely due to increased foot traffic in stores and improved e-commerce sales.