The International Finance Corporation’s (IFC) $22 million (R280 million) strategic investment into Bounty Brands will give the fast-growing consumer goods company a boost ahead of its listing in London and Johannesburg in April 2018.
The investment by IFC, a member of the World Bank, comes as Bounty is plotting further expansion into Poland.
Bounty was founded in 2014 by Cape Town-based private equity group Coast2Coast (C2C), which also listed healthcare conglomerate Ascendis Health in 2013. IFC also invested in Ascendis ahead of its JSE debut. In 2015, Bounty made a foray into Poland via the acquisition of food producer Sonko, identifying the region as its growth vector.
Bounty CEO Stefan Rabe (pictured) said two food related acquisitions in Poland are expected to be concluded in July and a third in the medium-term. “We are actively trying to diversify as there are not many independent businesses that we can buy in South Africa,” Rabe told Moneyweb. “There are more opportunities in Poland.”
If its Polish acquisition pipeline is concluded, Bounty would generate 50% of its income from Poland and the balance from South Africa.
Bounty’s 12 South Africa-based businesses include manufacturer of refuse and carrier bags Tuffy; food supplier Rieses Food Imports; Footwear Trading (distributor of fashion brands like Diesel and Levi’s); rooibos-based skin and healthcare products business Annique Health and Beauty; apparel manufacturer Musgrave Agencies; Cosmetix (which owns self-tanning range Caribbean Tan and distributes Catrice and Essence cosmetic products), direct-selling company Table Charm and others.
The businesses are housed in three divisions; Bounty Wear (footwear, apparel and accessories), Bounty Home and Care (cosmetics, fragrance, skincare and homeware) and Bounty Foods (food products). Anton van Zyl and Dave Thomas have been appointed as heads of the foods and home and care divisions respectively.
C2C has established offices in Poland’s capital of Warsaw and a management team – led by Chris Bull, former CEO of UK-based household and personal care company McBride – is to pursue complementary acquisitions.
Bounty is attracted to businesses posting top line growth of 10% to 12% in markets such as Slovakia, the Czech Republic and Poland but is less attracted to Eastern Europe countries like Ukraine and Russia. The businesses should also generate an ebitda (earnings before interest, tax, depreciation and amortisation) of at least R50 million to R100 million.
IFC’s investment in Bounty would give it a strong shareholder of reference and a wider investor base. “Anyone who is looking at investing in us can take some comfort in knowing that the IFC has looked at us and done their diligence on Bounty,” said Rabe.
Mary-Jean Moyo, IFC’s Africa head of manufacturing, agribusiness and services, supports Rabe’s view: “The IFC will tap into its global network and expertise to provide hands-on support to Bounty as the company sets foot into new frontiers.”
Bounty plans to grow beyond the R5 billion revenue mark and R1 billion in operating profit before the listings next year. Over the past two years, acquisitions have driven annual revenue of R3.7 billion and operating profit of R530 million.
Bounty has already tested investor appetite for its listing, having recently raised R400 million (compared with its initial R200 million target) in an oversubscribed private placement of shares, which would be converted into equity upon listing.
Bounty initially eyed a primary listing on the London Stock Exchange (LSE) and a secondary listing on the JSE. It has instead opted for a primary listing on the JSE and a secondary listing on the LSE’s junior stock market AIM. “The reason we flipped out the listing is that we found that the demand in South Africa for Bounty exceeded the demand in the UK,” said Rabe. “Liquidity is where the demand is.”