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Rhodes Food group in R660m equity capital raising

Proceeds to fund planned capex and internal investment, create capacity for possible future acquisitions and reduce debt.

Rhodes Food Group raised equity capital of R662.5 million through the issue of 25 million shares in an accelerated bookbuild after market close on Wednesday. 

The shares were placed with 26 local and offshore institutional investors at R26.50, representing a discount of 2.3% to the 30 day weighted average traded price in RFG shares.

CEO Bruce Henderson said the proceeds of the bookbuild will be used to fund planned capital expenditure and internal investment, create capacity for possible future acquisitions and to reduce debt levels. 

“RFG’s growth strategy is to complement organic growth with strategic, value-accretive acquisitions of food producers operating in allied product categories. We have concluded six acquisitions since the listing on the JSE in October 2014 and these businesses are making a meaningful contribution to group revenue, with profitability improving as the businesses are integrated.” 

Henderson said the acquisitions and capital investment have mainly been funded through operating cash flows and debt funding. “The equity capital raise will strengthen the group’s balance sheet and create capacity to pursue further attractive acquisitions,” he said. 

RFG recently announced its two largest acquisitions to date. Durban-based Pakco, which produces spices, condiments and instant meals, was acquired for R200 million and KwaZulu-Natal based pie producer Ma Baker was bought for R212 million. Both acquisitions are subject to due diligence and competition approval.

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I think it is disingenuous of the company not to offer shares to all shareholders, because not only have these institutions picked up the shares at a 2.3% discount but they will share the same dividend pool so benefiting twice in this particular deal.
But I suppose that how businesses roll these days, the man/woman in the street is inconsequential until they want to sell their products. I am a holder of shares in this company

I think it is disingenuous of the company not to offer shares to all shareholders, because not only have these institutions picked up the shares at a 2.3% discount but they will share the same dividend pool so benefiting twice in this particular deal.
But I suppose that’s how businesses roll these days, the man/woman in the street is inconsequential until they want to sell their products. I am a holder of shares in this company

End of comments.

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