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Premier Group, a South African fast-moving consumer goods (FMCG) company, has announced plans to float its shares on the main board of the Johannesburg Stock Exchange (JSE) as part of its strategy to spin off its operation from its parent company, Brait SE.
Premier, which operates under the banner of Brait SE, an investment holding company partly owned by South African billionaire businessman Christo Wiese, has been preparing for the proposed offering for more than a year.
The anticipated listing’s offer size is R3.7 billion ($215 million), which includes all secondary shares sold by Brait, which presently owns 99 percent of Premier.
The South African investment holding will sell between 43 and 53 percent of its stake in Premier at a recommended price range of R53.82 ($3.12)- 67.04 ($3.89).
Brait and Premier have entered into an agreement with Titan Cornerstone Investment, an investment holding company owned by Christo Wiese, as part of the terms of the JSE listing arrangement, in which Titan has irrevocably committed to purchasing 36.2 percent of the listing shares at the clearing IPO offer price.
Wiese’s interest in the consumer goods business will be strengthened by the acquisition, as he now owns a 28.5-percent stake in Brait, giving him an indirect interest in Premier in addition to the holdings he is going to acquire in the firm during the listing process.
If there is insufficient demand to meet the JSE minimum free float requirement of 20 percent, Titan and RMB will buy about 50 percent of the ordinary shares in Premier from Brait for R3.5 billion ($203.3 million), with Titan paying R3 billion ($174.2 million) and RMB paying R500 million ($29 million), through a private purchase of shares at the equity value implied by the bottom end of the price range.
By agreeing to underwrite the listing by up to R3.5 billion ($203.3 million) at the low end of the price range, Wiese’s company, Titan, and RMB, a part of FirstRand Bank Limited, have demonstrated their trust in the food industry and taken steps to significantly reduce the risk associated with the IPO.
