Consol’s got the bottle to burst into Africa
Welcome return to the JSE for glass packaging giant
The JSE’s small packaging sector will be reinforced by the confirmation on Thursday of glass packaging giant Consol’s long awaited return to the stock exchange.
Consol, which has investment house Brait as a major shareholder, looks set to raise substantial capital on listing to execute growth plans in South Africa and selected African markets.
Consol was delisted from the JSE in 2007 when it was bought out by a consortium of private equity investors including Brait Private Equity and Old Mutual Private Equity.
Private equity investors typically look to exit an investment within five to seven years – which meant the market had long been anticipating either the sale or relisting of Consol.For investors there is not a great deal of financial information around Consol or its capital raising plans in the “intention to float” (ITF) notice. More detail is only expected to be released with the prelisting statement is issued shortly.
A press statement noted that Consol was targeting to use around R2.7-billion of the net proceeds of the proposed listing to strengthen and deleverage its balance sheet.
Consol CEO Mike Arnold would not be drawn on Consol’s debt figure – but indicated that the intention was to bring gearing down to a more market related levels.
Market watchers said it would be intriguing to see which backer Consol was most indebted to – with most speculating Brait, which holds a 29.7% stake in the company.
Other major shareholders include Old Mutual Private Equity (22.8%), Sanlam Private Equity (12%), Sphere (10%), HarbourVest Partners (9.8%) and the Public Investment Corporation (7.5%).
Lentus Asset Management chief investment officer Nic Norman-Smith said it was an interesting time for Consol to relist with JSE packaging giant Nampak having put its glass packaging operations up for sale earlier in the week.
“Nampak’s capital allocation has not been great in recent years, so perhaps their decision to exit the glass business can be taken as a contra-indicator for Consol’s prospects as a listed counter.”Consol packages mainly for large customers in the beer, wine, flavoured alcoholic beverages, non-alcoholic beverages, spirits and food segments.
Consol earns most of its keep from South African operations but has expanded into Kenya and Nigeria as well as being in the throes of setting up a new facility in Ethiopia.
Arnold said Consol’s development plans were for aggressive growth locally and through the rest of Africa. “We believe that by combining our competitive advantage and technical ability … we can open up exciting opportunities to create significant value for our future shareholders.”