SOUTH AFRICA – Distell, the South African brewer has been re-listed on Johannesburg Stock Exchange and the company is eying growth opportunities in China and the rest of Africa.
The planned restructuring of its corporate structure involved suspension of Capevin, which holds a 29% stake in Distell from JSE on May 30 to form a merged company between Distell and Capevin, revealed an earlier announcement by Sens.
Business Day has reported that Distell Group minority shareholders are seeking government support for duty-free access to the rapidly growing Chinese wine market.
According to Chris Logan, CEO of Opportune Investments, South Africa had lost out on big opportunities in the Chinese market despite being a Brics member (Brazil, Russia, India, China and South Africa).
“One has to hope that the PIC [Public Investment Corporation] and Remgro are able to convince the government of the remarkable opportunity that exists for jobs, empowerment and tax revenue if a constructive and co-operative relationship can prevail between industry and the government,” said Logan.
Remgro, a Stellenbosch investment group is the controlling shareholder in the newly listed Distell Group Holding Limited with 31.4% stake while Public Investment Corporation (PIC) ranks as a major shareholder with 31%.
The listing brought an end to seven-year long bid to change the pyramid control structure to corporate structure that gave investors many entry points to Distell and provide increased free float that would boost the general marketability of Distell stock to local and international investors.
“In addition, the simplification of our shareholding structure should improve the company’s ability to raise the additional capital in the future, if required, to fund our growth ambitions,” said Managing Director, Richard Rushton.
An article in the Business Day displays the old pyramid structure as that put in place in the late 1970s and described by the competition authorities in the early years of the 21st century as a ‘notorious market-sharing arrangement’ between South African Breweries (SAB) and the Rembrandt Group (Remgro).
In the arrangement, SAB decided to limit its involvement in the wine and spirits market, Remgro undertook to stay out of the beer market while control was shared equally between Remgro, KWV/Capevin and SAB.
Over the years, Remgro became the controlling shareholder with 26.4% stake boosted indirectly by a 19% stake in Capevin.
Although Remgro was expected to buy out the SAB stake, the PIC emerged as the acquirer of the SAB stake for 170 rand a share for SAB’s 26.4% stake.
Meanwhile, Rushton said there was massive potential for growth in the rest of Africa for its wine, spirits and cider brands where the company’s brands were under represented in many economies.
He said priority markets in which Distell sought growth included Angola, Nigeria, Tanzania, Kenya and also Zimbabwe as it exercises capital discipline in the search for growth.
“We are looking forward to a rebound and better times in Zimbabwe and we would like to follow the growth in that economy,” said Rushton.