| Wed 2 Mar 2011, 7:16 | | BAT - BRAIT S.A. Societe Anonyme - Brait announces a R6BN capital raising |
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BAT
BRAIT
BAT - BRAIT S.A.,Societe Anonyme - Brait announces a R6BN capital raising,
restructures its business
BRAIT S.A.,Societe Anonyme
(incorporated in Luxembourg)
(RC Luxembourg B-13861)
JSE Code: BAT
Issuer code: BRAIT
ISIN code: LU 0011857645
Media release
BRAIT ANNOUNCES A R6BN CAPITAL RAISING, RESTRUCTURES ITS BUSINESS
MODEL AND ACQUIRES SIGNIFICANT STAKES IN PEPKOR AND PREMIER FOODS
Brait S.A. today announced that it is evolving its business model from being a
manager of third party funds to becoming an investment company. The move will
support the company`s growth strategy and enable it to continue leveraging its
extensive investment experience while raising capital in a more efficient
manner. The newly evolved model will see the Brait investment team utilising
their unique skills and track record for the direct benefit of shareholders in
Brait.
Instead of only raising private capital from third party investors to fund its
private equity investment programme, Brait will raise capital from time to
time in the public equity capital markets and invest this capital directly
into predominantly privately owned companies based in South Africa. Brait will
raise an initial R6bn through a fully underwritten rights issue, the bulk of
which will fund the acquisition of significant stakes in Pepkor and Premier
Foods.
This move will ensure that Brait`s highly experienced and successful
investment team can focus purely on deploying capital and driving value from
underlying assets. The Board of Brait believes that the evolution of its
business model should mean that Brait could replicate its leading private
equity fund return profile more directly for Brait Shareholders.
There will also be an organisational restructuring in line with the shift in
the business model and as part of that Brait CEO Antony Ball will step down
from his current position, with Brait executive director and private equity
CEO John Gnodde assuming executive leadership of the group as CEO of Brait
South Africa. Antony Ball will become a nonexecutive director of the newly
restructured group and will retain his responsibilities towards Brait IV (the
third party fund raised in 2006 and which is currently substantially fully
invested).
John Gnodde commented: "As our track record shows, we have always strived to
be at the forefront of the most efficient and effective investment models,
with long term capital appreciation as the ultimate goal. The reorganisation
means that Brait can evolve into an even more efficient, longer-term value-
driven, investment-growth business. We`ll be able to deploy capital more
efficiently and with greater flexibility and I think the move positions us to
become a shareholder of reference in market leading businesses."
Brait will acquire 24.6% of Pepkor and obtain a further exposure of 10.3% to
Pepkor
through an SPV. Furthermore, Brait will acquire 49.9% of Premier Foods and in
due course will make other significant investments as those opportunities
present themselves.
In addition, Pepkor chairman Christo Wiese, through a targeted shareholding of
33%, becomes an anchor shareholder in, and non-executive director of, Brait.
Christo Wiese`s vast experience as a successful entrepreneur in the South
African business environment will bring complementary expertise to the Brait
investment team. His investment in Brait is also a strong endorsement of the
proposed new business model.
The R6bn capital raising through the rights issue is underwritten by an entity
controlled by Christo Wiese, the Brait Investment Team and Rand Merchant Bank,
a division of FirstRand Bank Limited ("RMB"). The Investment Team will invest
alongside all shareholders to ensure complete alignment of interests. No net
fees will be payable to the Investment Team, ensuring the maximum return for
ordinary shareholders.
The Board of Brait believes that going forward, there is an opportunity to
maintain the existing strengths of the private equity model while, for the
first time, tapping into the strategic benefits of raising funds from the
public equity markets through a listed vehicle.
Public equity markets will provide a more permanent form of capital, thereby
complimenting the existing private equity funds. As part of the re-
organisation process, the company expects to realise significant cost savings
because of the reorganisation.
The new model means shareholders can participate directly in investments
through a capital efficient structure. There will be minimal cash drag,
efficient and prudent use of bank debt and an alignment to proven private
equity style returns with full value accrual to shareholders. The transactions
also provide concentrated, large exposures in successful private portfolio
companies.
RMB is advising Brait on the restructuring and capital raising.
Ends
Enquiries
Brunswick +2711 502 7300
Rob Pinker +28 83 326 7794
Itumeleng Mahabane +27 83 284 6774
Brait
John Gnodde +27 82 3899821
RMB
Paul Roelofse +27 82 379 9337
2 March 2011
Merchant bank and sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 02/03/2011 07:16:01 Produced by the JSE SENS Department.
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