Steinhoff Seeks Frankfurt Listing as It Cuts KAP Stake

Steinhoff International Holdings Ltd. is seeking a listing on the Frankfurt Stock Exchange as South Africa’s biggest furniture chain increases its exposure to investors in Europe, its biggest market.

The shares rose to a record as the move assured investors the retailer won’t list international operations separately and after Steinhoff said it will sell part of its stake in manufacturing unit KAP Industrial Holdings Ltd.

A German listing will be pursued “as soon as possible” after the publication of full-year earnings in early September, the Johannesburg-based company said in a statement yesterday. The retailer will retain a listing on the Johannesburg Stock Exchange. Steinhoff gets about half its revenue from continental Europe, where it owns French retailer Conforama.

“The proposed dual listing structure removes uncertainty relating to a possible separate listing of international assets,” Eckhard Goedeke, an analyst at SBG Securities in Johannesburg with a buy recommendation on the stock, wrote in a note. “The latter scenario would likely result in a dilution of shareholder returns if the market applies a holding company discount to the separately listed asset.”

Steinhoff “could attract additional investor interest,” if it’s included in the DAX Index of the 30 biggest and most actively traded companies on the Frankfurt Stock Exchange, Goedeke said.

The shares climbed 0.4 percent to 56.84 rand by the close in Johannesburg. That valued Steinhoff at 121 billion rand ($11.4 billion).

International Markets

Other South African companies with substantial international operations have made similar moves to be closer to bigger overseas markets. Brewer SABMiller Plc moved its primary listing to London in 1999, where it’s now based -- a similar trajectory to that of mining group Anglo American Plc. Both companies have kept South African market listings.

Steinhoff will reduce its stake in KAP Industrial to about 45 percent from 62 percent through the sale of 400 million shares to institutional investors. The bookbuilding process began this morning and the action will support the proposed Frankfurt listing and boost liquidity in the stock, the company said.

KAP Industrial shares slumped 7.9 percent to 3.85 rand, the biggest decline in almost six months. A sale at that price would raise Steinhoff about 1.54 billion rand. Investec is acting as sole bookrunner for the share sale.

(Corrects story published June 24 to remove reference to secondary listing in first paragraph and primary listing in third.)
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