Security barrier manufacturer Trellidor announced on Monday that it would be listing on the JSE on October 28. Trellidor CEO Terry Dennison said the company had reached a phase of its development where it needed to grow and could now provide investors with an opportunity to put their money behind an iconic South African brand with high-quality cash flows.
Asked whether the timing might be off, with markets taking a dip in recent weeks, Dennison said there were advantages and disadvantages to listing at such a time. While it might impact the value of the stock and the success of the Initial Public Offering (IPO), it also meant the company would be able to raise capital in a market more likely to provide opportunities for good value acquisitions.
Said Dennison: “The markets were buoyant until very recently, but the timing is good in that our business right now is poised for growth, and we’ll be adopting a strategy that will allow us to do that.”
The company released a statement announcing that the IPO would consist of approximately 53 million shares, representing 49% of the company’s shares in issue, with a placement of between R319 million and R372 million.
“A price range of 600 cents to 700 cents per share has been set, which equates to a market capitalisation of between R648 million and R756 million. Trellidor’s policy of distributing 50% of profit after tax translates into a premium dividend yield of between 3.5% and 4.1% based on the indicative price range,” the statement read.
Trellidor, which has 17 distributors in 17 African countries, will be adopting a three-pronged strategy that will see it growing its presence in various African markets; growing organically and also through acquisitions. In Africa it will be looking at opening distributorships in Nigeria, Angola, Uganda, DRC and northern Mozambique.
“Africa has been a focus since 2012. We’re already doing quite nicely there and, in terms of organic growth, we’ll be looking to adding complementary products to our range. The third prong is growth by acquisition where we will be targeting companies that are strategically beneficial to the growth of the company,” Dennison said.
The company’s track record is good reading, particularly over the financial periods from 2012 to 2015, wherein profit after tax went up 288% to R45.5 million. Free cash flow generated from operations, net of capital investment requirements, also increased by more than 150% to R53.7 million over the same period. Gross margin improved from 46.3% to 50.7%, and the return on capital grew from 20% to over 50%.
“We are very excited about the listing which paves the way for a high quality and valuable investment offering to the public and institutions,” Dennison said in the statement.