Wrap Text
Intention to Float Announcement
Libstar Holdings Proprietary Limited
(to be renamed Libstar Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2014/032444/06)
(JSE share code: LBR)
(ISIN: ZAE000250239)
INTENTION TO FLOAT ANNOUNCEMENT
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN, AUSTRALIA OR
ANY OTHER JURISDICTION WHERE IT MAY BE UNLAWFUL TO DISTRIBUTE THIS
ANNOUNCEMENT.
This announcement is not a prospectus and not an offer of securities for sale in any jurisdiction, including
in the United States, Canada, Japan or Australia.
Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in
connection with, any offer or commitment whatsoever in any jurisdiction. Any offer to subscribe for or
acquire Shares (as defined below) pursuant to the proposed Offering (as defined below) will be made, and
any investor should make its, his or her investment decision, solely on the basis of the information that is
contained in the Pre-listing Statement (the “Pre-listing Statement”) to be published by Libstar Holdings
Proprietary Limited (shortly to be converted to a public company and renamed Libstar Holdings Limited)
(the “Company” or “Libstar”) in due course in connection with the listing of its issued ordinary share capital
on the main board of the securities exchange operated by the JSE Limited (the “JSE”), subject to approval
by the JSE (the “Listing”). Copies of the Pre-listing Statement will, following publication, be available from
the Company.
PRESS RELEASE
LIBSTAR ANNOUNCES ITS INTENTION TO FLOAT ON THE MAIN BOARD OF THE JSE
Libstar has today announced its intention to list its issued ordinary share capital (“Shares”) on the main
board of the securities exchange operated by the JSE subject to market conditions and the approval by the
JSE. Libstar expects to be listed in the Food Products sector of the JSE.
Libstar is a leading producer and supplier of high quality products in the consumer packaged goods (“CPG”)
industry and markets a wide range of products in South Africa and globally. The Company provides a multi-
product offering in multiple categories across multiple channels, while strategically positioning itself within
the food and beverage and home and personal care sectors and maintaining the flexibility to capitalise on
growth areas in the CPG industry.
Andries van Rensburg, Co-Founder and Chief Executive Officer said:
“The decision to embark upon a JSE listing is an exciting step in the next phase of Libstar’s
development and growth story. The capital that we raise from the listing will support our growth
prospects and allow us to, amongst other things, invest further in our categories and manufacturing
facilities. Key management will remain materially invested in Libstar, thereby ensuring strong
alignment between existing and new shareholders.”
Robin Smith, Co-Founder and Group Financial Director said:
“Introducing Libstar to the public markets will enable us to augment our growth strategy and
strengthen our market position in a number of areas. Libstar has a strong track record of growth
and financial performance and is well-positioned to capitalise on the opportunities that lie ahead
for the future development of the Company.”
Libstar produces and supplies an extensive range of products across seven product categories:
(i) Perishables;
(ii) Ambient groceries;
(iii) Baking;
(iv) Snacks and confectionery;
(v) Niche beverages;
(vi) Home and personal care; and
(vii) Specialised food packaging.
These products are supplied to Libstar’s customers as three distinct product offerings:
(i) Brand solutions, comprising:
a. Libstar brands (brands that are proprietary to Libstar) and licensed brands (brands that are
licensed to Libstar by brand-owners);
b. Dealer own brands and private labels that are produced by Libstar in partnership with, or
on behalf of, its customers; and
c. Principal brands that are sourced, marketed and distributed by Libstar on behalf of brand-
owners;
(ii) Outsourced manufacturing solutions; and
(iii) Food service solutions.
Libstar’s product offerings are marketed, distributed and sold locally and internationally across four sales
channels:
(i) Retail and wholesale;
(ii) Industrial;
(iii) Food service industry; and
(iv) Exports.
The Company currently comprises twenty-seven business units, each of which has its own infrastructure,
employees and products. Libstar operates a decentralised business model, with each business unit being
responsible for its own procurement, production, distribution and logistics, sales and marketing and
customer relationships. Part of Libstar’s strategy has been the acquisition and development of value-
enhancing small to medium-sized businesses that demonstrate strong management drive and high quality
operations. Libstar, in turn, provides a platform for these businesses to grow by providing:
- Access to financial, reporting and business intelligence systems;
- Group supply chain optimisation initiatives;
- Strategic advice and guidance;
- Idea generation;
- Product development support;
- Category planning management;
- Demand management training and support;
- Manufacturing and technical support;
? Human Resources and talent development programmes; and
- Central treasury benefits of access to facilities for the provision of capital to fund growth and
investment in infrastructure and technology to build manufacturing capability and capacity.
Libstar’s shareholders at the date of this announcement (the “Existing Shareholders”) comprise:
- APEF Pacific Mauritius Limited (“Abraaj”) – 70.93%;
- Public Investment Corporation (SOC) Limited (on behalf of its client the Government Employees
Pension Fund) (“PIC”) – 19.36%; and
- Libstar management – 9.71%.
Prior to the Listing, Libstar expects to conclude a Black Economic Empowerment transaction which will see
the establishment of an employee share trust as well as a trust aimed at encouraging the development of
black-owned businesses within Libstar’s value chain. Both trusts will acquire a shareholding in Libstar
through an issue of Shares.
FINANCIAL HIGHLIGHTS
2017A 2016A 2015A
Revenue (R’000) 8,826,506 8,020,505 6,175,709
Revenue growth 10.0% 29.9% 30.0%
Adjusted EBITDA1 (R’000) 940,285 816,381 657,934
Adjusted EBITDA growth 15.2% 24.1% 30.4%
Adjusted EBITDA margin 10.7% 10.2% 10.6%
1
Adjusted EBITDA represents profit/(loss) before tax adjusted for the following: interest and tax expenses: gains or losses on the disposal of property,
plant and equipment, gains or losses on the disposal of non-current assets held for sale; impairment losses on goodwill and customer contracts; amounts
payable in respect of onerous contracts relating to the early termination of lease obligations, retrenchment and restructuring costs incurred as a result of
rationalising various business units within the Company including start-up costs of new operations and closure and relocation costs; acquisition related
costs, due diligence costs relating to the actual acquisitions and amortisation of customer contracts arising from acquisitions; expenses relating to
professional, legal and consulting fees in respect of shareholder transactions, strategic advisory fees and once-off legal costs (including costs associated
with the Offering); amortisation of intangible assets in relation to customer contracts; securities transfer tax relating to shareholder transactions; income
from government grants; expenses relating to non-cash flow items that represent straight lining of operating leases, unrealised foreign exchange gains
or losses, expenses relating to share appreciation rights granted to management, fair value adjustment to put options exercisable by executive
management; amortisation of intangible assets in relation to computer software and website costs; and depreciation of property, plant and equipment.
Libstar’s profitable and sustainable growth is due to both its strategic acquisitions as well as the organic
growth of the respective business units. In particular, growth is facilitated by the acceleration of value-
enhancing projects within existing business units, expansion in market areas where Libstar has
demonstrated its ability to grow at a pace ahead of the market pursuant to superior growth relative to the
industry norm in key categories and further growth into export markets.
In addition, Libstar has a strong track record of achieving profitable and sustainable growth in each of its
product categories. This is achieved by, amongst other things, driving growth in the right product categories
through category management initiatives, focusing on value-added products in the CPG market and
identifying global food trends such as convenience and innovation, out-of-home quick service and casual
dining, favoured premium dairy products, health and wellness, gluten free and speciality baking and niche
beverages.
KEY STRENGTHS AND COMPETITIVE ADVANTAGES
The following key strengths and competitive advantages will contribute to the continued growth and success
of Libstar:
- A unique central operational platform;
- A diverse business model with flexibility and resilience;
- A culture of entrepreneurship and innovation;
- A proven track record of identifying industry trends and accessing innovative product categories;
- An ability to lead the market with brand solutions;
- A strong technical and manufacturing competency and accreditation of facilities by recognised
authorities;
- An M&A track record and ability to integrate and grow acquired businesses;
- Strong and experienced management team at strategic and operational levels;
- Deep customer relationships; and
- A proven track record of profitable and sustainable growth.
BUSINESS STRATEGY
Libstar’s business strategy is centred around:
- Growing selected categories through supply chain optimisation, manufacturing and technical
excellence, sales and marketing expertise and upskilling of people;
- Nurturing and further developing customer relationships and consumer admiration;
- Innovation within existing categories through new product development initiatives, understanding
and catering to consumption trends (e.g. convenience, health, indulgence) and implementation of
new technologies;
- Accessing new high-growth categories (e.g. prepared meals);
- Accessing and growing new markets and channels;
- Expanding its capabilities and creating competencies by investing in market and technical
knowledge to expand and optimise brand solution ability;
- Making selective investments in plant, equipment, technology and marketing; and
- Acquiring businesses through targeted M&A activity to grow or access identified high growth
categories, expand current categories and, as far as practicable, incentivise and retain the
entrepreneurs through minority equity interests in order to bring to life Libstar's motto of "the heart
of an entrepreneur with the mind of a corporate".
RATIONALE FOR LISTING
The Directors believe the Listing is the next step in Libstar’s growth phase and will:
- Provide access to additional capital to (i) expand capacity and create additional capabilities in
existing production facilities, and (ii) support management's strategy of continuing to invest in the
current business units to improve margins and grow organically;
- Establish a platform from which equity capital may be raised in the future to provide investors an
opportunity to participate in the income streams and future capital growth of Libstar;
- Allow Libstar to optimise its capital structure and further strengthen its balance sheet and
profitability;
- Allow a mechanism for the attraction and retention of black management and black employees via
an appropriate share incentive scheme; and
- Increase the public profile and transparency of Libstar and thereby assist in unlocking new growth
opportunities in South Africa and internationally.
DIVIDEND POLICY
Libstar recognises the importance of maintaining a consistent and transparent dividend policy. The
Company has an initial target dividend pay-out ratio of 30-40% of pro-forma profit after tax. The amount,
timing and frequency of future dividends will be at the sole discretion of the Board and will be function of
the profitability of, growth opportunities available to, and strategy of Libstar.
THE OFFERING AND LISTING
The proposed offering comprises an offer for subscription of new Shares by the Company of approximately
ZAR1.5bn and a concurrent offer for sale of existing Shares by certain of the Existing Shareholders
(together, the “Offering”). Proceeds received by the Company from the Offering shall be used to repay a
portion of Libstar’s third party indebtedness, thereby creating more flexibility for Libstar to pursue its growth
strategy.
Through the Offering, Libstar is targeting a free float of at least 40%.
The Company, Abraaj and the CEO and Group Financial Director have agreed to lock-up arrangements of
180 days, following Listing. Such lock-up arrangements are subject to certain exceptions and may be
waived with the consent of the Joint Global Coordinators. It is anticipated that any residual shareholding of
the Government Employees Pension Fund will be transferred to the PIC’s listed equity portfolio.
The Standard Bank of South Africa Limited (“Standard Bank”) and J.P. Morgan Securities PLC (“J.P.
Morgan”) have been appointed as Joint Global Coordinators and Joint Bookrunners in relation to the Listing.
Standard Bank has been appointed as JSE Sponsor to Libstar. Linklaters and Webber Wentzel have been
appointed as legal advisers to the Joint Global Coordinators. Cliffe Dekker Hofmeyr and Clifford Chance
have been appointed as legal advisers to the Company.
The Pre-listing Statement, including full details of the Offering to be implemented in connection with the
Listing by way of a private placement will be made available to selected investors in due course. The
Offering will not be open to the public.
Johannesburg
9 April 2018
Enquiries:
Patamola
Nicholas Williams
+27 (0)82 600 2192
Standard Bank
Richard Stout
+27 (0)11 344 5725
Natalie Di-Sante
+27 (0)11 721 6125
J.P. Morgan
Emre Eler
+44 (0)20 7134 8427
James Mutugi
+27 (0)11 507 0529
www.libstar.co.za
NOTES TO THE EDITOR
KEY STRENGTHS AND COMPETITIVE ADVANTAGES
The Directors believe that the following strengths contribute to Libstar’s leading market position and
differentiate it from other businesses in the CPG industry:
A unique central operational platform
Libstar’s operating structure delivers numerous competitive strengths that provide the business units with
a platform for growth. The competitive strengths derived from Libstar’s operational platform include the
following:
- A diverse business model with flexibility and resilience
The Company has a diversified business that provides its customers with a multi-brand and product
offering in multiple product categories across multiple channels, which enables the Company to
strategically position itself within the CPG sector and gives it the flexibility to capitalise on growth
areas in the industry. The Company adopts a holistic approach to its product offerings and product
categories.
The diversity of Libstar’s business and portfolio gives the business flexibility and resilience by
reducing supplier and customer concentration risks. To further promote this flexibility and resilience
and to create operational efficiencies, Libstar’s value chain operates on a decentralised basis
whereby each business unit is responsible for its own operations. Where necessary, the Company
provides centralised structural, management and various other supports to the business units,
including dedicated executives who enhance value chain efficiencies across the disciplines of
procurement, manufacturing, sales and marketing, and logistics.
This decentralised operational structure extends to, amongst other things, the procurement of raw
materials, packaging materials, manufacturing processes, warehousing, marketing and sales,
distribution and customer relationships. In addition, there are certain centralised finance disciplines
within the Company, such as a central treasury, common reporting disciplines across the business
units, margin control, cash conversion, working capital management and disciplined capital
expenditure programs.
- A culture of entrepreneurship and innovation
The Company fosters an entrepreneurial culture that encourages product innovation across all
business units. The Company endeavours to operate with "the mind of a corporate and the heart
of an entrepreneur", allowing the business units the flexibility to develop new products and to work
with their customers in the creation, development and production of new product lines. A
decentralised operating model is vital to the achievement of entrepreneurialism across the business
units, which gives rise to innovation, both with respect to Libstar’s product offering as well as in the
production processes of each business unit and the way in which they conduct their operations.
Given the diversity of Libstar’s product range and product offerings, consolidation of operations
leads to unnecessary complexities, a loss of focus and ultimately higher costs, reducing the
entrepreneurial ethos of the Company and business unit agility in the process. Moreover, the
Company believes that cost savings that are achieved through centralised functions are often lost
in increased central office costs and lower effectiveness.
While the Company ensures cost savings across its operations, the Directors believe that the
benefits of cost savings are far outweighed by the benefits and returns of an innovative
entrepreneurial culture across the business units.
- A proven track record of identifying industry trends and aligning innovative products categories
Libstar has a history of identifying local and global consumer trends. Following the identification of
relevant consumer trends, the Company has aligned or added to its products and product offerings
to capitalise on these trends and, where possible, to assist its customers in increasing their market
share in selected product categories. Libstar’s operational diversity has enabled it to take
advantage of these industry trends. Certain of the global food trends that have been identified by
the Company include an emphasis on convenience, a focus on consumer health and wellness and
a need to provide value for consumer's money. In addition, the Company has identified a number
of region-specific opportunities that have resulted in the production of new products that have been
introduced to consumers in a particular jurisdiction based on an identified demand for such
products.
There are a number of examples of how the Company exploits these trends. These include:
o Amaro Foods producing flour tortilla wraps which are supplied on a national scale to,
amongst others, KFC, in order to capitalise on consumer need for greater convenience;
o Ambassador Foods producing healthy nut snacks and Amaro Foods producing gluten free
baked goods to meet trends towards a focus on health and wellness amongst consumers;
o Montagu Foods producing a range of chutneys under dealer own brands for Pick n Pay
and private label for Shoprite Checkers to provide consumers with value for money
alternatives; and
o Finlar developing a Cajun chicken burger patty for McDonald's, which has been introduced
to several regions elsewhere in the world, based on consumer demand in such regions.
The Company has also been able to exploit consumer trends such as the increase in the number
of consumers dining out of home. The Company has exploited these opportunities through,
amongst other things, its supply of products to quick service restaurants such as McDonald's, KFC
and Nando's and to family restaurant chains such as Panarotti's, Mugg & Bean and Spur Steak
Ranches.
- An ability to lead the market with brand solutions
The Company has the ability to lead the market with its brand solutions product offering and has a
strong track record of developing brands. The Company manages a wide range of Libstar brands,
including Lancewood, Cape Herb and Spice, Elvin, Cook 'n Bake, Denny, Goldcrest, Slimsy and
Cani as well as licensed brands such as Robertsons, Safari, Weigh-Less and Chamonix. In
addition, the Company produces a variety of products under dealer own brands, including, amongst
others, "W" (for Woolworths), "Freshline" (for Spar), "Crystal Valley" (for Shoprite Checkers) and
"PnP" (for Pick n Pay), as well as private label products for its customers. The Company also
represents several well-known international brands in South Africa in its principal brand product
offering such as Kiri, Arla, Bel, Laughing Cow, Act II, Lurpak, Tabasco, Kikkoman and Maille.
Certain of Libstar’s products command a leading or significant market share in a particular product
category, while the Company produces and/or supplies multiple products in a single product
category to its customers. For example, Lancewood's Libstar branded cheese products has a
significant market share in both soft and hard natural cheeses. In addition, Lancewood distributes
certain principal branded cheeses, such as Kiri and Bel, as well as producing dealer own brands
cheese products for its customers, thereby ensuring that, across Libstar’s brand solutions product
offering, the Company is a leader in the natural cheese product category.
In Libstar’s dealer own brands product offering, the Company has achieved considerable success
developing specialised products for Woolworths. Through a process of technical and commercial
inputs, new product development and internationally accredited production facilities, the Company
has played, and continues to play, a leading role in providing brand solutions to brand owners
(including private label) through its unique set of competencies. Retailers are increasingly
developing their competence around dealer own brands and management believes that the
Company is well placed to capitalise on resulting opportunities.
? A strong technical and manufacturing competency and accreditation of facilities by recognised
authorities
Libstar has strong technical and manufacturing competencies and an extremely diverse product
range which necessitates extensive and diverse production capabilities. The Company has
invested significant capital in its manufacturing infrastructure and has over 35 production facilities,
over 200 production and packing lines and over 75 unique manufacturing technologies across the
business units.
Libstar’s key manufacturing strengths include: (i) a sound knowledge of food manufacturing
processes and standards for a wide range of products, from procurement to final packaging, (ii) the
ability to manage the manufacturing process for both high and low volume products in a cost
effective manner and to the required standard, (iii) the application of a wide range of packaging
technologies, (iv) the ability to adhere to the highest international standards of manufacturing and
governance at low cost, and (iv) cost effective design and construction of consumer goods
manufacturing plants. The Company aims to drive margin enhancement through improved
manufacturing and packaging efficiencies, resulting in less waste and greater volumes of product
at a lower conversion cost per unit. These efficiencies will be driven from the ability to more
accurately measure key metrics, as a result of a roll-out of new standard costing systems and an
increased emphasis on variance analysis and reporting, all of which will strengthen Libstar’s
technical and manufacturing competencies.
Libstar's strong technical and manufacturing competencies are complemented by production
facilities that are required to adhere, amongst other things, to strict quality control and food safety
standards, with many of Libstar’s production facilities having passed rigorous customer audit
processes. Customers rely upon Libstar’s proven and robust commitment to quality management
of its production facilities and Libstar's production processes to ensure the full traceability of its
products.
? An M&A track record and ability to integrate and grow acquired businesses
The Company has a proven track record of its ability to acquire businesses demonstrating sound
management and high growth potential and to integrate such businesses into Libstar’s structure
and operations. Examples of existing business units which have successfully integrated acquired
businesses include, amongst others, Rialto Foods (which has integrated the businesses of Taste
of Japan, Patleys and Truckles into its operations), Contactim (which has integrated the business
of Cotton King and Ferrengi into its operations), Cape Herb and Spice (which has integrated the
businesses of Natural Herbs and Spices, Khoisan, Kalk Bay Foods and The Blenders into its
operations) and Montagu Foods (which has integrated the business of Denny Foods and Cani
Rusks into its operations).
Each of the business units acquired by the Company has increased its capacity and, in many
instances, its capabilities (both organically and through acquisitions), and has returned strong
financial performances following its integration into the Company structure.
The growth of business units is facilitated and bolstered by Libstar’s ability to drive brands and
products into new categories, product offerings and sales channels. Following their acquisition,
business units benefit from Libstar’s platform and are able to achieve more rapid growth by utilising
the advantages of the Company structure. These advantages include, amongst other things: (i) the
provision of working and investment capital to fuel growth, (ii) the appointment of key people and
assistance to drive growth, (iii) the adoption of systems and disciplines that are designed to
maximise cost effectiveness, efficiency and brand and product awareness, (iv) technical input and
assistance, (v) assistance with direction and strategy, (vi) access to reporting and measurement
tools, (vii) entrenched supplier and customer relationships, (viii) idea generation, (ix) people
development and training, and (x) access to market data, trends and analysis and support in
capitalising on current consumer needs.
By way of example, since its acquisition in 2008, Lancewood has utilised the Company platform to
increase its reach by selling its products through the food service solutions and export sales
channels in addition to the retail and wholesale channel. This has facilitated growth in Lancewood's
financial performance. In addition, since its acquisition, Rialto Foods has capitalised on customer
and consumer demand by expanding its product offering to sell a wide range of products from
multiple product categories, namely perishables (cured meats and premium charcuterie), ambient
groceries (pasta, canned foods, condiments, sauces, noodles etc.) and baking (baking aids). Rialto
Foods has also grown its principal brand product offering through building relationships with a wide
range of principal brand owners.
Strong and experienced management team at strategic and operational levels
The Company has a highly experienced management team. The executive management team has a
collective experience of over 50 years working with the Company, with many of them having vast
experience in a number of key areas in the CPG industry, including commercial and M&A, finance and
accounting, sales and marketing, technical and manufacturing, supply chain management and human and
industrial relations. The Directors believe that this collective experience, in conjunction with the
management team's disciplined approach to managing the business, reduces Libstar’s exposure to a
number of risks inherent in the CPG industry and increases Libstar’s ability to identify and integrate growth
opportunities through M&A transactions.
The roles and competencies of the central office in Libstar’s operations include (i) guiding M&A, commercial
and transactional growth, (ii) financial, accounting, governance and risk management, (iii) sales and
marketing support and strategic planning, (iv) manufacturing and technical support, optimisation and
development, (v) supply chain optimisation, (vi) general management, direction and strategic alignment
within the Company and idea generation, (vii) human resources and industrial relation initiatives, and (viii)
information technology standardisation and management.
The executive management team is supported by (i) a strong base of second and third layers of
management, and (ii) experienced senior management teams across the business units, with some
business units being under common management to create operational efficiency. The depth of Libstar’s
management experience across multiple disciplines in both the central office and at each of the business
units ensures that the Company is well covered from a management succession point of view, with multiple
personnel who are in a position to be able to step into group management functions from time to time.
Libstar’s management structure is designed to allow business units to continue to operate with an
entrepreneurial culture and to maximise agility to enable quick and responsible decision-making. The
executive management of business units are often retained as minority shareholders in Libstar to offer
performance incentives and to align interests relating to strategy and growth opportunities. Many of the
business units' founding members are still within the Company, including those at Amaro Foods (Tony
Amaro), Finlar (Terry Millar), Ambassador Foods (Daniel Jacobs), Cape Herb and Spice (Paul Jibson),
Natural Herbs and Spices (Mark Neill), Multi-cup (Derek Couzens and Richelieu van Schalkwyk), Hurters
Honey (Jacques Hurter), Montagu Foods (JD van Deventer), Rialto Foods (Luciano Previtera and Michele
Mirotto), Berfin (Grant McGregor), Contactim (John Mertsch) and Millennium Foods (Karel la Cock).
Deep customer relationships
Libstar’s long-standing relationship with South Africa's major retailers and food service providers affords
the Company access to a diverse range of consumers across a wide spectrum of income groups and
geographical areas. These customers include a number of large retailers and wholesalers in South Africa
and Africa such as Woolworths, Shoprite Checkers, Pick n Pay, Spar, Massmart and Clicks, as well as
large businesses in the food services industry such as McDonald's, KFC, Nando's, Spur Steak Ranches
and Mugg and Bean. In addition, the Company provides Outsourced Manufacturing Solutions to large
CPG/FMCG companies such as Tiger Brands, Unilever, County Fair and Nestlé.
The Company offers its customers the convenience of being a single supplier of multi-brands and products
across multi-categories, with a nationwide presence and strong manufacturing and production capabilities.
The Company believes that its decentralised operational structure presents an attractive option for
customers which has, in turn, resulted in long-standing and profitable relationships with them. This is
because customers are able to engage directly with business units for operational efficiency with the
comfort of knowing that business units are supported by central group management who may be
approached to raise issues, concerns, and opportunities from time-to-time.
A number of the business units have fostered long-standing relationships with Libstar’s customers, some
of which were established prior to Libstar’s acquisition of the relevant business unit. By way of example,
Finlar has supplied McDonald's with meat and chicken products since McDonald's commenced business
in South Africa in 1994 and each of Ambasador Foods, Amaro Foods and Rialto Foods have had long-
standing relationships with Woolworths. To further grow these relationships, the Company works
continuously with its customers to develop new products, manage brand placement within its customers'
stores and to undertake promotional activities which highlight Libstar’s products. For example:
- Rialto Foods has worked alongside Woolworths to increase Woolworths' pasta sales at a CAGR of
15.5% in value from June 2012 to June 2017 (based on Rialto sales data) and is a preferred
supplier of pasta products to Woolworths; and
- Ambassador Foods has assisted Woolworths in becoming a leader in the retail nut segment with
market share of 38.8% in South Africa (based on Woolworths in-store data from May 2017).
A proven track record of profitable and sustainable growth
The Company has been built up over 12 years to a business with R8.8 billion revenue, which has been
achieved through both organic and acquisitive growth. The Company achieved:
- revenue of R4.75 billion in the 2014 financial year, which grew to R8.8 billion in the 2017 financial
year (a CAGR of 23%);
- gross profit of R1 billion in the 2014 financial year, which grew to R2 billion in the 2017 financial
year (a CAGR of 25%);
- Adjusted EBIT of R423 million in the 2014 financial year, which grew to R807 million in the 2017
financial year (a CAGR of 24%); and
- Adjusted EBITDA of R505 million in the 2014 financial year, which grew to R940 million in the 2017
financial year (a CAGR of 23%).
Libstar’s profitable and sustainable growth is due to both Libstar’s strategic acquisitions as well as the
organic growth of the respective business units. In addition, growth is facilitated by the acceleration of
projects within business units, expansion in market areas pursuant to superior growth relative to the industry
norm in key categories and further growth into export markets.
In addition, the Company has a strong track record of achieving profitable and sustainable growth in each
of its product categories. This is achieved by, amongst other things, driving growth in the right product
categories through category management initiatives, focusing on value-added products in the CPG market
and identifying global food trends such as convenience and innovation, out-of-home quick service and
casual dining, favoured premium dairy products, health and wellness, gluten free and speciality baking and
niche beverages.
By way of illustration:
- in the perishables product category, the Company achieved revenue of R1.98 billion in the 2014
financial year, which increased to R3.73 billion in the 2017 financial year, resulting in a CAGR of
24% over the period;
- in the ambient groceries product category, the Company achieved revenue of R971 million in the
2014 financial year, which increased to R2.64 billion in the 2017 financial year, resulting in a CAGR
of 40% over the period;
- in the baking product category, the Company achieved revenue of R372 million in the 2014 financial
year, which increased to R515 million in the 2017 financial year, resulting in a CAGR of 12% over
the period;
- in the snacks and confectionery product category, the Company achieved revenue of R259 million
in the 2014 financial year, which increased to R429 million in the 2017 financial year, resulting in a
CAGR of 18% over the period;
- in the niche beverages product category, the Company achieved revenue of R283 million in the
2014 financial year, which increased to R428 million in the 2017 financial year, resulting in a CAGR
of 15% over the period;
- in the HPC product category, the Company achieved revenue of R708 million in the 2014 financial
year, which increased to R827 million in the 2017 financial year, resulting in a CAGR of 5% over
the period; and
- in the specialised food packaging product category, the Company achieved revenue of R180 million
in the 2014 financial year, which increased to R253 million in the 2017 financial year, resulting in a
CAGR of 12% over the period.
According to Euromonitor data, the Company achieved greater than average revenue CAGR in each of the
perishables, ambient groceries, baking, snacks and confectionery and niche beverage product categories
between the 2014 and 2017 financial years (with no data available for specialised packaging solutions). By
way of illustration, Libstar’s revenue growth in the key product categories of perishables, ambient groceries,
baking and snacks and confectionery against the market's revenue growth in the same categories from the
2015A to 2017A financial years was as follows:
Group CAGR Market CAGR
Product Category
(FY2015A to FY2017A) (FY2015A to FY2017A)1
Perishables ............................. 20% 9%
Ambient groceries ................... 28% 10%
Baking ..................................... 21% 11%
Snacks and confectionery ...... 15% 11%
Note: 1 Euromonitor International – Packaged Food in South Africa, February 2017
BOARD OF DIRECTORS
Wahid Suleiman Hamid – Chairman (Non-Executive Director)
Mr Hamid is a Managing Partner of the Abraaj Group. He is a member of Abraaj's Global Investment
Committee, and the Management Executive Committee. Mr Hamid has been a director of the Company
since 2014. Before joining Abraaj, Mr Hamid was Senior Vice President of Corporate Strategy and
Development at PepsiCo, a member of PepsiCo's Executive Management Committee and a Board Member
of PepsiCo Americas. Previously, Mr Hamid spent 15 years with The Boston Consulting Group ("BCG"),
where his last role was Senior Partner and Managing Director in New York. During his tenure at BCG, he
led the firm's consumer goods and retail practice across Asia Pacific. Mr Hamid obtained an Honorary PHD
in Humane Letters from Occidental College in May 2011, an MBA from the Wharton School, University of
Pennsylvania in 1988 and a BSEE from the California Institute of Technology in May 1983.
Andries Vlok van Rensburg – Co-founder and CEO (Executive Director)
Mr Van Rensburg joined Sasol in 1982 and before long he was promoted to a position of operations
manager. In 1989 he acted on his passion for the food business and took up a position with Tiger Brands,
where he served as managing director of subsidiaries such as Oceana Fishing, Langeberg Foods and the
Tiger Brands Culinary Division. Mr Van Rensburg co-founded Libstar in 2005 where he has worked
continuously since. Mr Van Rensburg obtained a B. Eng and M. Eng from the University of Stellenbosch in
1979 and 1982 respectively. He also obtained a MBL from the University of South Africa in 1985.
Robin Walter Smith – Co-founder and Group Financial Director (Executive Director)
A chartered accountant, Mr. Smith left the accounting profession for financial management positions in
commerce and industry. Mr. Smith was a shareholder and served as the financial director of the Sherwood
Export group for 10 years, as financial director for South African Breweries ("SAB") African operations, and
then as commercial director for SAB International. Mr Smith was a director of Brait South Africa and a
shareholder and director of Metier Investment and Advisory Services Proprietary Limited before co-
founding Libstar in 2005, where he has worked continuously since. Mr. Smith obtained a B.Compt and B.
Compt Honours degrees from the University of South Africa and qualified as a chartered accountant through
SAICA in 1983. Mr Smith serves as Libstar’s Financial Director and dedicates his time fully to such role.
Sandeep Khanna (Non-executive Director)
Mr Khanna is a seasoned investor and pioneer of private equity with over 20 years of experience in Africa.
Mr Khanna has demonstrated a track record of investing in Africa since 1995 through direct investing,
Investment Committee membership and senior key leadership positions held at two leading emerging
markets fund management firms over investment cycle of several funds. Mr Khanna has been a Director of
the Company since 2014 and is a Chartered Management Accountant in United Kingdom.
JP Landman (Independent Non-Executive Director)
Mr Landman is an independent analyst on political-economic trends, focusing on trends in politics,
economics, demography and social capital. Mr Landman has previously worked at an investment house,
where he was rated number one analyst in his category. Mr Landman has a BA LLB from Stellenbosch
University (1978), studied Economics at Harvard (1998 and again in 2005), and obtained a MPhil in Future
Studies (cum laude) from Stellenbosch in 2003. In 2009 he completed a course at Oxford University
Continuing Education on the economies of the BRIC countries (Brazil, Russia, India & China). Mr Landman
was appointed as a Director on 1 March 2018.
Wendy Luhabe (Lead Independent Non-Executive Director)
Ms Luhabe started her career in marketing and worked in the cosmetics and automotive sectors, including
working in Germany and the US for the BMW Group. She graduated with a BCom from the University of
Lesotho in 1981, and was among the first generation of black women to qualify with a commerce degree.
She has been a social entrepreneur for 25 years and has been involved in human resources development
and the economic empowerment of women. She pioneered the founding of Women Investment Portfolio
Holdings, Women Private Equity Fund and more recently, Women in Infrastructure, Development and
Energy. Ms Luhabe has served as a non-executive director and chairman of companies in a diverse range
of industries since 1992. Her first board appointments were with Imperial Cold Storage and Tiger Brands.
She is a recipient of 4 Honorary Doctorates for her contribution to the empowerment of women in various
sectors of the economy. Ms Luhabe was the founding Chancellor of the University of Johannesburg. Ms
Luhabe was appointed as a Director on 1 March 2018.
Phumzile Langeni (Independent Non-Executive Director)
Ms Langeni is the Executive Chairman of Afropulse Group Proprietary Limited, a women-led investment,
investor relations and corporate advisory house. She is a stock broker by training and was previously the
economic adviser to the Minister of Minerals and Energy. Ms Langeni is the non-executive chairman of two
unlisted companies Mineworkers Investment Company Proprietary Limited, and Primedia Proprietary
Limited, a non-executive director of Imperial Holdings Limited, Transaction Capital Proprietary Limited,
Metrofile Holdings Limited. Ms Langeni's qualifications are a BCom from the University of Kwa-Zulu Natal,
BCom (Hons) (UNISA) and MCom (University of Pretoria). Ms Langeni was appointed as a Director on 1
March 2018.
DISCLAIMER:
The contents of this announcement have been prepared by and are the sole responsibility of Libstar.
The information contained in this announcement is for background purposes only and does not purport to
be full or complete. No reliance may be placed by any person for any purpose on the information contained
in this announcement or its accuracy, fairness or completeness.
This announcement is not for publication, distribution or release, in whole or in part, directly or indirectly, in
or into the United States (including its territories and possessions, any State of the United States and the
District of Columbia), Canada, Japan, Australia or any other jurisdiction where it may be unlawful to
distribute this announcement. The distribution of this announcement may be subject to specific legal or
regulatory restrictions in certain jurisdictions and persons into whose possession any document or other
information referred to herein comes should inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a violation of the securities laws of any such
jurisdiction. The Company assumes no responsibility in the event there is a violation by any person of such
restrictions.
This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe
for securities to any person in the United States, Canada, Japan, Australia or in any jurisdiction to whom or
in which such offer, solicitation or sale would be unlawful. The Shares may not be offered or sold in the
United States unless registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”)
or offered pursuant to an exemption from, or in a transaction not subject to, the registration requirements
of the Securities Act. The Shares have not been, and will not be, registered under the Securities Act or
under the applicable securities laws of Canada, Japan or Australia. Subject to certain exceptions, the
Shares referred to herein may not be offered or sold in Canada, Japan or Australia or to, or for the account
or benefit of, any national, resident or citizen of Canada, Japan or Australia. There will be no public offer of
securities in the United States, Canada, Japan and Australia.
This announcement does not constitute or form a part of any offer or solicitation or advertisement to
purchase and/or subscribe for Shares in South Africa, including an offer to the public for the sale of, or
subscription for, or the solicitation of an offer to buy and/or subscribe for, Shares as defined in the South
African Companies Act, No. 71 of 2008 (as amended) or otherwise (the “South African Companies Act”)
and will not be distributed to any person in South Africa in any manner that could be construed as an offer
to the public in terms of the South African Companies Act. These materials do not constitute a prospectus
registered and/or issued in terms of the South African Companies Act.
This announcement is not a prospectus and the Offering referred to herein will not be open to the public.
In member states of the European Economic Area (the “EEA”) (each, a “Relevant Member State”), this
announcement and any offer if made subsequently is directed only at persons who are “qualified investors”
within the meaning of the Prospectus Directive (“Qualified Investors”). For these purposes, the expression
“Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in a Relevant Member State), and includes any relevant
implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive”
means Directive 2010/73/EU.
In the United Kingdom this announcement is directed exclusively at Qualified Investors (i) who have
professional experience in matters relating to investments falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) who fall
within Article 49(2)(A) to (D) of the Order, and (iii) to whom it may otherwise lawfully be communicated, and
any investment activity to which it relates will only be engaged in with such persons and it should not be
relied on by anyone other than such persons.
This announcement may include statements that are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements may be identified by the use of forward-looking terminology,
including the terms, “expects”, “intends”, “may”, “will” or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.
Forward-looking statements may and often do differ materially from actual results. Any forward-looking
statements reflect the Company’s current view with respect to future events and are subject to risks relating
to future events and other risks, uncertainties and assumptions relating to the Company’s business, results
of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements
speak only as of the date they are made.
Each of the Company, Standard Bank and J.P. Morgan and their respective affiliates expressly disclaims
any obligation or undertaking to update, review or revise any forward-looking statement contained in this
announcement whether as a result of new information, future developments or otherwise.
Any subscription or purchase of Shares in the proposed Offering should be made solely on the basis of the
information contained in the Pre-listing Statement to be issued by the Company in connection with the
Offering. The information in this announcement is subject to change. Before subscribing for or purchasing
any Shares, persons viewing this announcement should ensure that they fully understand and accept the
risks which will be set out in the Pre-listing Statement when published. No reliance may be placed for any
purpose on the information contained in this announcement or its accuracy or completeness. This
announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation
of any offer to purchase or subscribe for any Shares or any other securities nor shall it (or any part of it) or
the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.
The date of the Listing may be influenced by things such as market conditions. There is no guarantee that
Listing will occur and you should not base your financial decisions on the Company’s intentions in relation
to Listing at this stage. Acquiring investments to which this announcement relates may expose an investor
to a significant risk of losing all of the amount invested. Persons considering making such investments
should consult an authorised person specialising in advising on such investments. This announcement
does not constitute a recommendation concerning the Offering. The value of shares can decrease as well
as increase. Potential investors should consult a professional advisor as to the suitability of the Offering for
the person concerned.
None of Standard Bank or J.P. Morgan or any of their respective affiliates or any of their respective
directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or
makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the
information in this announcement (or whether any information has been omitted from the announcement)
or any other information relating to the Company, its subsidiaries or associated companies, whether written,
oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever
arising from any use of the announcement or its contents or otherwise arising in connection therewith.
Each of Standard Bank and J.P. Morgan is acting exclusively for Libstar and no-one else in connection with
the Offering. They will not regard any other person as their respective clients in relation to the Offering and
will not be responsible to anyone other than Libstar for providing the protections afforded to their respective
clients, nor for providing advice in relation to the Offering, the contents of this announcement or any
transaction, arrangement or other matter referred to herein. J.P. Morgan is authorized by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom.
In connection with the Offering, each of Standard Bank and J.P. Morgan and any of their respective
affiliates, may take up a portion of the Shares as a principal position and in that capacity, may retain,
purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of
Libstar or related investments in connection with the Offering or otherwise. Accordingly, references in the
Pre-listing Statement, once published, to the Shares being issued, offered, subscribed, acquired, placed or
otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or
dealing by any of Standard Bank and J.P. Morgan and any of their respective affiliates acting in such
capacity. In addition, Standard Bank and J.P. Morgan may enter into financing arrangements and swaps in
connection with which they or their affiliates may from time to time acquire, hold or dispose of Shares. None
of Standard Bank and J.P. Morgan nor any of their respective affiliates intend to disclose the extent of any
such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do
so.
In connection with the Offering, Standard Bank, as stabilisation manager, or any of its agents, may (but will
be under no obligation to), to the extent permitted by applicable law, over-allot Shares or effect other
transactions with a view to supporting the market price of the Shares at a higher level than that which might
otherwise prevail in the open market. Standard Bank is not required to enter into such transactions and
such transactions may be effected on any stock market, over-the-counter market, stock exchange or
otherwise and may be undertaken at any time during the period commencing on the date of the
commencement of conditional dealings of the Shares on the JSE and ending no later than 30 calendar
days thereafter. However, there will be no obligation on Standard Bank or any of its agents to effect
stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such
stabilising measures, if commenced, may be discontinued at any time without prior notice. In no event will
measures be taken to stabilise the market price of the Shares above the offer price. Save as required by
law or regulation, neither Standard Bank nor any of its agents intends to disclose the extent of any over-
allotments made and/or stabilisation transactions conducted in relation to the Offering.
In connection with the Offering, Standard Bank as stabilisation manager, may, for stabilisation purposes,
over-allot Shares up to a maximum of 15% of the total number of Shares comprised in the Offering. For the
purposes of allowing it to cover short positions resulting from any such over-allotments and/or from sales
of Shares effected by it during the stabilisation period, Standard Bank will enter into over-allotment
arrangements pursuant to which Standard Bank may purchase or procure purchasers for additional Shares
up to a maximum of 15% of the total number of Shares comprised in the Offering (the “Over-allotment
Shares”) at the offer price. The over-allotment arrangements will be exercisable in whole or in part, upon
notice by Standard Bank, at any time on or before the 30th calendar day after the commencement of
conditional trading of the Shares on the JSE. Any Over-allotment Shares made available pursuant to the
over-allotment arrangements, including for all dividends and other distributions declared, made or paid on
the Shares, will be purchased on the same terms and conditions as the Shares being issued or sold in the
Offering and will form a single class for all purposes with the other Shares.
Unless otherwise indicated, market, industry, market share and competitive position data are estimates
(and accordingly, approximate) and should be treated with caution. Such information has not been audited
or independently verified, nor has the Company ascertained the underlying economic assumptions relied
upon therein.
Information to Distributors: Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b)
Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local
implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming
all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes
of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, Shares have
been subject to a product approval process, which has determined that such Shares are: (i) compatible
with an end target market of retail investors and investors who meet the criteria of professional clients and
eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution
channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target
Market Assessment, Distributors should note that: the price of the Shares may decline and investors could
lose all or part of their investment; the Shares offer no guaranteed income and no capital protection; and
an investment in the Shares is compatible only with investors who do not need a guaranteed income or
capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are
capable of evaluating the merits and risks of such an investment and who have sufficient resources to be
able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to
the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offering.
Furthermore, it is noted that, notwithstanding the Target Market Assessment, Standard Bank and J.P.
Morgan will only procure investors who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of
suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group
of investors to invest in, or purchase, or take any other action whatsoever with respect to the Shares. Each
distributor is responsible for undertaking its own target market assessment in respect of the Shares and
determining appropriate distribution channels.
Johannesburg, 9 April 2018
Sponsor:
The Standard Bank of South Africa Limited
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