Premier Group’s listing price of R53.80 provides a good entry point to invest in the group compared with its peers, CEO Kobus Gertenbach said on Friday morning, speaking after the listing of the country’s biggest food manufacturer.
Gertenbach said it had been a great morning; volumes traded had not been as high as expected, but the share price was trading above the IPO price of R53.82.
He said the lower share trading volumes were, however, not unexpected as the group’s free float was low, with major shareholder Brait, the private equity firm, still holding 47% of the shares, and much of the other shares were taken up by institutional investors in the IPO.
He said he expected Premier’s free float would increase once Brait started to reduce its shareholding – Brait had indicated it would unbundle the shares in “due course”.
He said Premier, which could trace its roots back to 1890, had a good track record of generating growth in the food manufacturing sector, and it also had a good track record of investing capital and being able to derive good returns from that invested capital.
For instance, he said the group had at the end of last year completed a R500 million upgrade of a bakery outside Pretoria, and in July this year would start a similar rebuild of a major bakery in the Johannesburg area.
He said in the group’s last interim period, revenue grew 25% and earnings before interest tax depreciation and amortisation was up 15%, and the group’s current performance was approximately along the same lines.
Premier sells under brands such as Snowflake, Blue Ribbon and Mandla Mageu, and manufactures through some 30 factory sites around the country.
The approximate R6.9 billion raised through the listing will be used by Brait to address its future liquidity requirements.
Some of the pre-listing institutional commitments were from ABAX, Allan Gray, Laurium, Mergence and Steyn Capital.
Over the past three financial years, Premier’s revenue grew at a compound annual growth rate (CAGR) of over 15%, driven by volume and market share growth and operational efficiencies. Adjusted earnings before interest tax depreciation and amortisation increased 20% CAGR over the period.
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