In an event that is as rare as rainfall in the driest parts of the world, a company has issued a pre-listing statement for a JSE listing. New listings are pretty hard to come by on the local market. This one isn’t quite “new” but is better than nothing.
CA Sales Holdings is currently listed on the Cape Town Stock Exchange and is being unbundled by PSG as part of that famous investment holding company collapsing its structure on the JSE. This asset isn’t unknown to the market, but this is the first time that investors on the JSE can invest in it directly.
The Cape Town Stock Exchange will be losing this listing as a result of this deal, which is unfortunate in my view. It would be good to see that exchange develop.
No fresh capital will be raised as part of the listing moving to the JSE and the anticipated market cap is nearly R2.2 billion, so this is a solid mid-cap business.
CA Sales is a fast moving consumer goods (FMCG) operation that has its core asset in Botswana, which it acquired in 2012. The group operates the largest distributorship business in Botswana. Today, the group has offices and facilities in Botswana, South Africa, Namibia, Zambia, Zimbabwe, Lesotho and Swaziland.
As is typical of a group that has been built through acquisitions, there are a number of non-controlling shareholders in underlying subsidiaries. This creates complexity but also means that there are management teams in the subsidiaries that usually have skin in the game.
With a dividend policy of paying 20% of headline earnings as a dividend, this company offers a yield to investors as well as growth prospects from exposure to African consumers. The “emerging middle class” theme is relevant here.
If you are looking for more information, you can download the pre-listing statement at this link.
The much higher levels of liquidity and visibility on the JSE mean that this company will be on the radar of far more investors going forward. It brings something different to the market, which is always most welcome.
