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The well-trodden path to Poland

Bounty Brands follows other SA firms.

Consumer brands business Bounty Brands is following a well-trodden South African path as it expands its office in Poland ahead of an anticipated acquisition spree in that country.

South African Breweries pioneered the route in 1995. Since then the likes of Steinhoff, Pepkor, Life Healthcare, Naspers, Metair and property companies Echo Polska, Nepi and Rockcastle have followed in its footsteps. Shoprite also has plans in this regard.

Read: Market warms to Echo Polska after glacial start

Redefine Properties makes bold moves into Poland

Central Eastern Europe, and Poland in particular, is an attractive investment destination for local (and global) companies looking for growth opportunities. “GDP is growing at 4.5%, sovereign risk is low, the workforce is highly educated and significant funds are being invested in infrastructure,” says Stefan Rabe, Bounty Brands CEO.

The private sector in that region is highly fragmented with 60% of it dominated by SMEs. “These are often family-owned businesses where the owners have no succession plan and are willing to consider selling to outside business interests.”

Bounty is exploring acquisitions that fit into its existing structure of Food; Home & Personal Care; and Apparel. “Within this we will look for acquisitions in spaces where the multinationals are not – for instance healthy snacking.”

The company recently announced the acquisition of Stella Pack, a manufacturer of recycled refuse bags and other non-chemical household products. The business slots into Bounty’s Home Care division and complements its Tuffy business in South Africa, which manufactures and distributes a range of recycled plastic bags and household products.

This is the second acquisition in Poland following the purchase of Sonko, a value-added rice and healthy snacks business.

The company is scaling up its Polish operations ahead of a possible listing on the JSE in 2018, with a secondary listing on the London Stock Exchange. Rabe is hopeful that three, possibly four acquisitions will be concluded ahead of this event. The objective is to achieve a revenue mix that is derived 50% from SA and 50% from the CEE region.

The secondary listing is to facilitate international capital raising. It is difficult to buy businesses in Europe using South African rands because entrepreneurs do not want SA assets as collateral for their debt, Rabe says.

Bounty Brands recently reported revenue of EU200 million (R3.2 billion), earnings before interest, tax, depreciation and amortisation of EU24 million (R387 million) and normalised headline earnings of EU11 million (R177 million). About one fifth of revenue was generated in the CEE area.

Bounty is owned by investment holding firm Coast2Coast. The C2C strategy is acquisitive, using a deal team of 50 professionals to identify strong brands and profitable businesses that can be acquired at fair value. The strategy sees it using its own balance sheet to acquire platform companies onto which it can bolt-on acquisitions. The C2C team helps drive growth via acquisitions, portfolio improvement and synergy, while Bounty’s own management team focuses on the day-to-day business.

C2C applied this strategy successfully in the development of Ascendis Health, which it established in 2008 and listed in 2013.

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Can someone please enlighten me. Africa’s population is due to double in next 20yrs. Surely the opportunities are at home! The only news making headlines is when companies head offshore!

Ha ha, if the opportunities were here at home, you’d still be here, or making your way back.
Africa’s population doubling over the next 20 years is something global leaders are aware of, and are preparing for, to ensure that the African’s remain in Africa, not a good thing at all, doesn’t present any opportunity, if you can get out, get out now.

Unfortunately sir you are quite correct on all counts. Africa promised so much & delivered so little. Big issue will be water and population growth. More people fighting for less available land. Any yes – if you can get out – get out.

The slicing of economic cake in smaller pieces…

So what you say, if Africa’s population is going to double over the next 20y, then my maths tells me that (on average) each member of the African population will individually own HALF the monetary assets in 20years’ time, shared amongst them.

You would then need double the number of African investors to achieve the same today(?)

(…assuming little “real” growth, and taking inflation into account)

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