| Tue 5 Oct 2004, 8:47 | | Trading opens at premium of 8% on offer price of R |
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Trading opens at premium of 8% on offer price of R28
Lewis Group makes solid JSE debut
October 5, 2004
By Dirk De Vynck
Cape Town - The Lewis Group, one of the country`s foremost furniture groups, made a solid debut on the JSE Securities Exchange yesterday, with trading opening at R30.25, a premium of 8 percent on its offer price of R28 prior to listing.
It retracted somewhat in later trading to close at R29.85. This values the company at R2.98 billion.
The JD Group and Ellerines, Lewis` major competitors, closed 50c higher at R51.84 and 40c up at R41.60, respectively. The general retailers index increased by 0.60 percent.
The huge interest in the share resulted in large volume flows, with more than 7.858 million shares of the 100 million issued trading hands.
Abri du Plessis, a fund manager at Gryphon Asset Management, said the solid interest in the Lewis share was to be expected as it had top management and a well-run debtors book.
Also, the retail sector was underpinned by solid economic fundamentals that were conducive to good retail trading.
`I was not surprised the share opened higher as I thought the offering price of R28 was relatively cheap. The listing of Lewis gives shareholders increased access to a good performing industry.`
Evan Walker, a retail analyst at Andisa Securities, said the solid trade and increased share price could be attributed to interested shareholders that could not get their hands on the share through the book-building process prior to listing.
Alan Smart, the chief executive of Lewis, said that 10 percent of the issued shares prior to listing was taken up by UK and European institutions. Of the 18 foreign institutions that bought shares, two were Italian, one Swiss and the rest UK-based.
As for the local institutions, Old Mutual, Sanlam, Investec and Standard Bank/Liberty together took up about 25 percent of the issued shares.
`We were pleasantly surprised by the take-up by foreign institutions. Our road shows in the UK had shown that the international analysts had a very good knowledge of the local retail market. The more stable rand exchange rate and interest rate environment could also have fuelled their interest.`
Walker was not surprised by the extent of the foreign interest, as this was also evident in other local retailers.
Reasons for this were that retailers were reasonably easy to understand relative to other JSE-listed companies. Also, retailers traditionally paid good dividend yields, which was to the liking of overseas investors.
Walker said: `South Africa`s retail shares also traded at lower price:earnings multiples, which made them cheap relatively to their international peers.`
Lewis has been the 10th listing on the JSE this year. At least 23 companies delisted this year.
The Lewis Group`s flagship is its 400 Lewis chain of stores. Other brands include the Best Electric specialist stores and Lifestyle Living.
