SOUTH AFRICA – Rhodes Food Group’s debut on the JSE on Thursday means it can accelerate its growth strategy and take advantage of acquisitions, says CEO Bruce Henderson.

Along with making jam, the Western Cape-based company, cans fruit and owns brands such as Magpie and Bull Brand.

Rhodes Food closed at R11 after its first day as a publicly traded company, an 8% drop from its pre-listing R12 placement price to institutions. Rhodes raised R600m through its share placement. Its trading volume was 8.5-million shares valued at more than R100m.

Rhodes joins giants like Tiger Brands and Pioneer Foods in the JSE’s food products sector, where the average market cap is about R12bn. Rhodes recorded sales of R1.8bn last year.

“Sub-Saharan Africa has some of the world’s fastest growing markets and is an area of particular focus,” said Mr Henderson. “We believe there is a significant opportunity for Rhodes, Bull Brand and some of our other brands to expand into this market.”

The company’s regional division, which accounts for about 65% of revenue, covers SA and other sub-Saharan countries, including Kenya, Mozambique, Zambia and Malawi. It will also look at entering West Africa.

Rhodes Food has made several acquisitions over the past 10 years, including Magpie in 2004, Sunpie in 2006, Giants Canning in 2007, Del Monte in 2010 and Bull Brand last year.

“I am of the belief that Rhodes will be buying Pieman’s Pantry’s manufacturing facility and brands from RCL Foods for around R250m because it’s a great complementary fit to its existing offering,” Vunani Securities analyst Anthony Clark said.

Rhodes also produces milk, cream and cheese under the Ayrshire brand for Woolworths and makes handcrafted cheeses under the Portobello label. It also has an arrangement with the up-market retailer to provide ready-made meals.

Apart from buyouts, Rhodes Food will use the proceeds of the share offering to expand its production capacity and efficiency at its facilities in SA and Swaziland, and also to settle debt, part of which arose during a management buyout in 2012.

The group’s share began the day on a strong footing‚ rising to R12.40. However‚ by midday it slipped to R11.60.

“The listing has gone pretty badly, the price hit below the initial public offering level, I think the sponsoring brokers again mispriced the entire issue.

The same people did the Clover listing many years ago and did exactly the same thing — they had a bookbuild and they priced the issue too aggressively and the after-market collapsed. I think their greed has made this issue less than satisfactory,” Mr Clark said.

Rhodes also exports canned fruit and fruit juice purees and concentrates to Europe, the Far East, the US, Canada, Australasia, Russia and the Middle East.

The business was founded in 1896 by Cecil John Rhodes in the Franschhoek Valley.

October 2, 2014;