Bidvest plans to clean up overseas

Acquisition of UK hygiene services business the start of major expansion

Bidvest’s hygiene services business will be a big focus area for the group’s future international expansion, particularly in the UK and rest of Europe, as the industrial conglomerate aims to become one of the dominant players in that sector.

PHS Group, the largest hygiene service provider in the UK, which also operates in Ireland and Spain and which Bidvest recently acquired for just under £500m, is expected to play an important role in the expansion plans.

Departing Bidvest CEO Lindsay Ralphs, who retires at the end of September after 28 years with the group, said this week: “We do think that there is a gap in the hygiene service industry around the world.

“There is no really big, massive, strong, dominant player and we have managed to acquire the largest hygiene service businesses in the UK, and with this pandemic hygiene has really been escalated up in everybody ’ s minds.”

It is a global industry “that will grow dramatically, I would imagine, as people realise the risks of touching stuff when they go shopping or to a meeting. People are becoming a lot more conscious of hygiene.”

Ralphs, who was speaking after the release of annual results for the year ended June, said Bidvest would apply the lessons it learnt when founder Brian Joffe “internationalised” the food service business, spun out as a separate listed company called Bidcorp in May 2016.

“We learnt a huge amount with our food service expansion. We ended up in 39 countries around the world in four hubs. We really understand how to go about it very well.”

Dirk van Vlaanderen, associate portfolio manager for Kagiso Asset Management, said the “list of South African corporates who have successfully executed an M&A-led international expansion plan is actually quite short”, with Bidcorp and SABMiller standing out as examples of success stories.

“Recently, South African corporates have not covered themselves in glory, with big international bets that have turned out to be disasters. We hope Bidvest will take the same measured, cautious approach shown with their food service expansion to help ameliorate the inherent risks in an M&Aled growth strategy.”

Van Vlaanderen said a concern was how the facilities management market would be changed after the Covid-19 pandemic, “with more people working from home and possibly lower demand for cleaning and hygiene services”.

The group’s focus on its international hygiene business comes as it decides to shed other operations.

Bidvest will sell both its car rental business and BidAir Services, which provides ground, passenger-handling and water services to airlines, as both segments are likely to be facing a long road to recovery.

The group will also reduce its 27% interest in JSE-listed Comair to virtually zero after the airline’s business rescue process is completed.

Ralphs said he felt a “little emotional” about his retirement, but this was countered by the succession planning that began in March last year with the appointment of Mpumi Madisa as CEO-designate. Madisa, like Ralphs, has been at Bidvest a long time — 15 years in her case.

We ended up in 39 countries around the world in four hubs. We really understand how to go about it very well