Fast Moving Consumer Goods (FMCG) distributor, CA Sales says there was an overwhelming response to its shares sale to both institutional and individual investors with the offer oversubscribed by 107%.
Announcing the results of the company’s Initial Public Offer, CA Sales yesterday said it received 376 applications totalling 146 million shares for the 136 million shares that were on offer.
CA Sales, which will list on the main board of the Botswana Stock Exchange (BSE) today (Thursday), was selling the shares at P3.45 each. The bulk of the shares were being sold through a private placement to institutional investors with only 27 million shares offered to individual investors through an Initial Public Offer (IPO).
The company did not however reveal whether the oversubscription was from the public offer or from institutional investors.
“The successful applicants will be allotted ordinary shares equal to their applications while the invited investors will receive a prorate allocation of their application,” said CA Sales. The company, which is a service provider in the FMCG industry, has its origins in Botswana but is now South African domiciled with operations in seven other African countries. In the IPO, founding promoter and current managing director, Jagdish Shah sold 9.5 million shares. Post listing on the BSE, Shah’s shareholding will be almost halved to 10 million shares representing a 2.6% stake in the company.
According to the company’s prospectus for listing on the BSE, about P470 million was to be raised through the shares sale, with P420 million accruing to existing shareholders who were selling 121.6 million shares.
The biggest sellers amongst the existing shareholders is a company called Export Marketing Investments Proprietary Limited which is offloading 106 million shares at P3.45 each. As part of the listing process, CA Sales also issued 14.5 million new shares to raise P50 million, which the company says will be used
Amongst some of the biggest buyers of the shares through the private placement are local fund managers such as Kgori Capital who were supposed to buy 36 million shares to become the third largest shareholders in CA Sales at 8.6% stake followed by Investec at six percent shareholding (25 million shares). With the private placement likely to be the part that was oversubscribed, some of the invited investors will not be allotted their full application. CA sales had its first building block when JSE-listed PSG Holdings acquired Botswana’s largest consumer goods distribution company, CA Sales and Distribution in 2012 before expanding operations into the region.
The company now offers services including selling, merchandising, warehousing, distribution, marketing and promotions throughout Botswana, Swaziland (SMC Brands), Namibia (Pack n Stack), South Africa (Logico), Lesotho (SMC Brands), Zimbabwe (Bullred Distribution), Zambia (Expo Africa and Mozambique (Expo Africa).
“Through the shares offer and the listing, the company aims to raise capital for further organic growth and accretive merger and acquisition opportunities.
“The transaction will also provide shareholders with a liquid, tradable asset within a regulated environment, while also giving the general public an opportunity to acquire an equity stake in CA Sales and thereby share in its potential success in the future,” reads the company’s prospectus for the shares offer.
CA Sales markets and distributes products from companies such as Tiger Brands, Unilever SA, Nestle, Kellogg’s, Nampak, Aspen, Colgate Palmolive, Pioneer Foods and South African Breweries. PSG was not selling its shares in the offer, but its stake will be diluted to 51% due to the new issued shares.