Bidvest London Listing May Be Way to Finance U.S. Deals

Bidvest Group Ltd., the second-biggest South African company by revenue, said listing its international food-services unit in London may provide cheaper funding to expand into new markets, including the U.S.

“It has been quite complicated to continue to fund significant acquisitions abroad out of the South African balance sheet,” Chief Executive Officer Brian Joffe said on a conference call today. “Management are quite keen, having now expanded into Europe, South America, to potentially get involved in the U.S.”

Bidvest has businesses ranging from food services to pharmaceutical products, with South Africa as its main market. Acquisitions added 7.2 billion rand ($674 million) in sales last year. The company is evaluating a stock sale in London for its food-service business as investor interest grows after deals in the U.K. and Italy. Joffe said the funds involved to pursue an acquisition in the U.S. are “quite significant.”

For the year ended June, trading profit advanced 17 percent to 8.9 billion rand, Bidvest said in a statement today. Sales rose 20 percent to 183.6 billion rand, of which food services ranging from distribution to ingredient manufacturing, accounted for more than half.

Bidvest rose 2.5 percent to 288.34 rand at the close in Johannesburg, the biggest gain since Feb. 27, valuing the company at 95.5 billion rand.

“The prospects for the group remain positive, supported by the anticipated benefits arising from the significant acquisitions and investments made over the past year,” Bidvest said. “In South Africa, trading conditions are expected to remain tough, compounded by the impacts of a rising interest rate climate, its impact on consumer demand and low economic growth.”

The South African Reserve Bank raised its benchmark interest rate for the second time this year on July 17, cutting disposable income for borrowers. Africa’s second-largest economy shrank in the first quarter of this year because of a five-month strike at the world’s largest platinum producers.

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