Joffe’s Long4Life listing heads for a R2bn welcome
DEAL maker Brian Joffe, the founder of Bidvest and Bidcorp, will raise R2-billion when he lists new investment company Long4Life on the JSE this month.
Long4Life will target investments in the lifestyle category, and could include businesses in the beauty, outdoor, restaurant, sport and retirement sectors.
Long4Life is already negotiating an investment in fast-growing beauty salon business Sorbet. The maximum price payable will be R130-million.
Joffe said on Friday he was not unduly concerned about the effect the reshuffling of the Cabinet might have on Long4Life.
“When we formed Bidvest in 1988 it was also a time of political uncertainty.”
His biggest concern, he said, was clinching deals. “We don’t want to end up with a lot of small acquisitions that take up too much management time.
“We will look to building silos of scale, building assets on top of one another. We also need to acquire people with skills that will help build up Long4Life.”
Initial investment would be made in South Africa, but global ambitions could be realised over time.
Long4Life will aim to secure majority or significant minority interests in its portfolio companies with a view to providing strategic direction.
The investment criteria are similar to those Joffe followed so successfully at Bidvest and Bidcorp for the best part of three decades: profitable track record; strong cash flow generation; market-leading brands; capital light; attractive growth prospects; experienced and entrepreneurial management; and ability to consolidate their respective markets. Long4Life would also consider underperforming businesses with attractive turnaround prospects.
He said the company would search for businesses with management teams that could participate in building a successful future for Long4Life.
Joffe was only recently relieved of full-time duty at conglomerate Bidvest and food services giant Bidcorp.
Although there was a flurry of new listings on the JSE in recent months — some with sizable initial public offerings — market watchers say that Joffe’s new venture will be the most exciting in years.
Joffe built Bidvest, which last year split off food services business Bidcorp, from scratch in the late ’80s by following a smart acquisition strategy. The combined value of Bidvest and Bidcorp tops R140-billion, with enormous value created for the original backers over the decades.
Empowerment group Brimstone will take up 40 million shares, equating to a 9.88% stake in Long4Life.
Business Times has learnt that asset manager Stanlib and Investec Bank have committed to taking up shares worth R250million each. Joffe will subscribe for shares worth R100-million.
Lentus Asset Management chief investment officer Nic Norman-Smith said retail investors were likely to go “giddy” over the listing of Long4Life.
“Joffe could be likened to Warren Buffett. This is a jockey that investors will have no hesitation backing.”
But Norman-Smith cautioned investors not to “expect past achievements to be replicated in the future”.
“Investors still need to pay attention to how much is being paid for investments.
“Although Joffe is not known for overpaying for assets, it’s important that investors not get carried away bidding up future returns. This could be of concern from a valuation perspective.”
Several big business personalities — no longer burdened with the everyday demands of running a large corporate empire — have in recent years shifted their attention to new ventures. These include Johann Rupert (Remgro and Richemont) with Reinet Investments and mining magnate Brian Gilberston (formerly of BHP Billiton) with Pallinghurst Resources. But neither shot the lights out, despite high initial expectations.
Some market watchers say Long4Life’s significant war chest will ensure lots of opportunities came knocking. Well-priced JSE opportunities may include smaller-cap companies such as sports HOT FOR SORBET: Brian Joffe retailer Holdsport, electronic consumer brands business NuWorld, health and beauty specialist Imbalie Beauty, logistics business Santova, technology security counter ISA Holdings and fast-food franchiser Taste Holdings.
Whether Long4Life will have the appetite to take on significant investments in larger companies remains to be seen. Specifically, there has been mention of packaging giant Nampak, which Bidvest — via investment arm BB Investments — tilted at unsuccessfully in the past.
This is a jockey that investors will have no hesitation backing Joffe could find several well-priced investment opportunities on the JSE