Abraaj Is Said to Delay IPO of S. African Consumer Firm Libstar

  • Buyout firm is said to weigh pushing out IPO until next year
  • South Africa is facing credit downgrade as growth slows

Abraaj Group, the emerging markets-focused private-equity firm, is delaying the initial public offering of South African food and household products maker Libstar Holdings Ltd., according to people familiar with the matter.

Abraaj, which bought a controlling stake in Libstar in 2014, is weighing a potential listing for Libstar in 2018 after the company publishes its full-year accounts, the people said, asking not to be identified as the information is private. The Dubai-based firm had been working with JPMorgan Chase & Co. and Standard Bank Group Ltd. on a sale that was expected to raise about $300 million this year, people said in June.

No final decisions have been taken and the timeline and venue for a share sale could change again, the people said. A representative for Abraaj declined to comment.

A director of Libstar said the company has never made public statements around a potential listing of the business. “Our strategy is to be listing- or sale-ready, so as to take advantage of potential exit opportunities for our private equity shareholders if, as and when these may arise," the company said in an emailed statement. “There was no definitive plan to list the business this year. This remains an option, but is not cast in stone.”

South Africa’s economy may not be conducive to IPO activity in coming months with its local-currency debt ratings expected to be downgraded to junk by the end of the year as growth slows and political infighting continues. The 12-member FTSE/JSE Africa General Retailers Index has declined 7.9 percent this year compared with a 18-percent rally that has taken the all-share index to a record, fueled by gains in stocks that earn income from abroad.

Libstar, which started operations in 2005, is one of the largest unlisted food and personal care manufacturers in South Africa, according to Abraaj’s website. Its annualized net revenue is in excess of 7 billion rand ($496 million) and it operates 28 business units across five of South Africa’s nine provinces.

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