Private equity firm AEEI mulls increasing stake in Pioneer Foods

SOUTH AFRICA – African Empowerment Equity Investments (AEEI), which also controls Premier Fishing & Brands is considering acquiring a bigger stake at of South Africa’s consumer brand Pioneer Foods, reports Business Day.

AEEI Chief Executive Officer, Khalid Abdulla confirmed the company’s expression of interest in buying a bigger stake in Pioneer.

Khalid added that AEEI might be an opportune time to consider such a deal as the Pioneer share price appeared to offer good value at current trading levels.

But we’d still want a bigger discount on the share price. Our intentions will come to light in the next three to four months.

AEEI CHIEF EXECUTIVE OFFICER, KHALID ABDULLA

AEEI, already holds a 0.75% stake in Pioneer after participating in an empowerment scheme in 2012 when almost 29-million shares were issued to black investors with its empowerment stake valued at about R143m at the ruling Pioneer share price.

However, this comes at a time when Pioneer shares’ trade at Johannesburg Stock Exchange (JSE) have been trending downwards from a high of US$10.29 (R143) to US$6.4 (R82).

Nevertheless, most food counters have experienced a downward shift in their share trade at the bourse for the past 18 months as a result of tough economic conditions which have squeezed consumer spending.

It seems AEEI could pitch to buy out other empowerment scheme participants in Pioneer when phase two of the black economic empowerment investment scheme expires in March.

The phase two empowerment scheme almost 29 million shares issued to black-controlled special purpose vehicles at R55.15 (US$3.97) –  R58.05 (US$4.18) a share.

AEEI has already established its ground in in the local food sector through its significant participation especially by controlling stake in Premier Fishing & Brands.

Premier has a strong focus on commercial fishing, fish processing and marketing exporting products such as south coast lobster, farmed abalone and squid.

Analysts have applauded the move by AEEI saying that apart from capitalising on a potential recovery at Pioneer, such a transaction would add balance to AEEI’s investment portfolio.

The group’s portfolio is currently skewed towards Ayo, which is by far its biggest single investment position.

Pioneer foods is one of the largest South African producers and distributors of a range of branded food and beverage products with products such as Sasko, Weet-bix, ProNutro, White Star, Safari, Ceres and Liquifruit.

In the financial results of the firm for the year ended September 2018, Pioneer posted a 3% increase in revenue to US$1.45 billion from US$1.4 billion in 2017.

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