Sale of clothing retailer peps up Brait’s net asset value a share

INVESTMENT group Brait grew its net asset value a share by 141.4 percent to R77.12 in the year to March primarily because of the sale of clothing retailer Pepkor, it said yesterday.

Brait is about 35 percent owned by South African billionaire Christo Wiese and its portfolio mostly comprises holdings in privately owned businesses operating in a range of industries.

Brait said yesterday that the sale of its 37 percent interest in Pepkor to Steinhoff International had generated seven times more returns since it was acquired in 2011.

The deal, the largest acquisition of a South African company in more than a decade, is expected to create a retailer with more than 6 000 stores across three continents.

“The group realised its 37 percent interest in Pepkor, generating returns of seven times multiple of cost and a 69.5 percent internal rate of return from the acquisition date of July 4, 2011,” Jabulani Moleketi, Brait’s executive chairman, said.

In terms of the sale agreement, Brait had received R30 billion on March 30, comprising cash of R15.086bn and 200 million Steinhoff shares.

Steinhoff has provided Brait with an underpin for these 200 million shares through a guaranteed minimum price of R57 per share.

Acquisitions

The closing price for Steinhoff was R76.03 at the end of March, resulting in a year-end carrying value of R15.206bn.

In the year under review, the company built its gym membership with an 80 percent stake in Virgin Active and a 90 percent stake in New Look, a leading fashion multichannel retailer.

Analysts have previously commended the Virgin Active acquisition, saying it boosts the company’s prospects in Asian and African markets. Virgin Active has 267 clubs in nine countries on nine continents, and 1.3 million adult members.

“Virgin Active and New Look represent exciting acquisitions for the group going forward and together with Premier, enhance the portfolio’s defensive nature, strong cash flow generation and geographic diversification,” Moleketi said.

New Look has more than 800 stores operating in 21 countries and a fast growing e-commerce platform including its own online platform, as well as partnering with third party ecommerce retailers.

Ratings agency Moody’s has previously said the Brait deal would not affect Moody’s B3 rating for New Look, as the current level of leverage meant the existing debt structure would remain in place after the change of ownership.

Moleketi said Premier had delivered on its strategy of brand building, product inno- vation and operational efficiencies to increase margins on its core staple foods business.

Shares on the JSE rose 2.34 percent to close at R111.