South Africa’s largest private equity company is transforming itself into a long-term investment holding company and aims to raise ZAR 6 billion ($857.7 million), according to a report on Bloomberg. Brait SA (www.brait.co.za), listed on the JSE Ltd stock exchange (www.jse.co.za), lists its business on its website as “is the raising and management of investment funds that are typically classified as Alternative Assets. The current product-set includes private equity funds, mezzanine debt funds and a range of hedge fund solutions. Additionally, Brait deploys its capital in proprietary investment programmes in these product areas. These investments are made predominantly in South Africa and its region. Investors include leading global and South African institutions.” Bloomberg says Brait manages over $800 mn in 4 funds.
Bloomberg reported a statement to the JSE today (2 March) that the money raised will be used to buy 24.6% of Pepkor Ltd, South Africa’s biggest clothes retailer, which has more than 2,800 outlets in 12 countries under the Pep, Ackermans and Best & Less brands and will use a special purpose vehicle to get exposure of another 10.3%. It will also buy 49.9% and lend R221.2 mn in shareholder loans to Premier Foods, maker of Blue Ribbon bread and Snowflake flour.
The news agency quotes Zaheer Joosub, an analyst at Citigroup Inc: “This is one of those investment opportunities that comes along once every 20 years. It’s a very prudent thing to do.”
Executive director John Gnodde will replace Chief Executive Officer Antony Ball. Christo Wiese chairman of Pepkor and Shoprite Holdings Ltd. will take an anchor shareholding – targeted at 33% – and will become non-executive director of Brait.
The new Brait shareholding is additional to the 20% of Pepkor held by Brait Fund III. The agency quotes Gnodde saying: “We are doing the deals to afford the market an opportunity, through Brait, to get exposure in good, cash companies.” He said the aim was to become a long-term investor. As a private equity firm, Brait would have looked for an exit after about 8 years.
According to a previous company announcement on 13 January, as reported on I-Net Bridge: “International investment group Brait S.A.,Societe Anonyme disclosed on Thursday that the company is considering a potential transaction that may involve a significant equity markets capital raising, the securing of an anchor shareholder, the acquisition of investment assets and an internal reorganisation in support of these steps. The group, that that manages alternative assets, with a focus on hedge funds and private equity, said in a cautionary that the potential transaction remains highly conditional and will require, inter alia, regulatory and shareholder approvals.”
Bloomberg says the offer will be 3 new Brait shares for every 1 held and will open on 15 April 15 and close on 27 May. Shareholders representing 57.41% of Brait’s issued share capital have signed commitments or irrevocable undertakings supporting the transaction.