South African financial services group Investec Plc detailed plans on Monday to raise nearly 100-million pounds via a London share sale to expand its businesses, braving jittery stock markets.
Investec has decided to go ahead with the long-planned London listing despite global stock market slumps, during which several companies pulled out of initial public offerings (IPOs), including telecoms firm Yell and home goods firm Focus Wickes.
Investec said on Monday it planned to list 10-million new shares on the London stock market, which would represent 8,4% of its enlarged share capital.
The new London listing would be equal to Investec’s current listing in Johannesburg, so Investec’s Johannesburg shares would have the same economic value as those in London.
”A listing in London is a critical step towards our goal of becoming one of the world’s leading specialist banking operations,” Investec Chief Executive Officer Stephen Koseff said in a statement.
Investec will become the sixth South African firm to seek a dual listing in London as a means to improve its international profile and get better access to global capital markets, which should enhance its ability to raise funds at more attractive rates.
Shares in Investec were largely unaffected, slipping 1,3% to R149 in midsession Johannesburg trade, in line with a weak local sector.
SELLING MORE SHARES
”Probably the only potential negative issue is who is selling the eight million shares,” said JP Morgan Chase’s Johannesburg banking analyst Jacques Badenhorst.
Investec said existing shareholders could sell a further eight million shares if demand were strong, and that the final offer price would be determined after the end of its book building exercise. But it did not identify the shareholders.
Badenhorst said that while the current market environment was poor, the fact that Investec had decided to stick to its guns and go for the listing as planned was positive.
”I think at least the positive thing is they’re not trying to time the market,” he said. He pointed to delays in listing South African state phone operator Telkom, which was postponed last year because of poor market conditions.
The government now plans to list Telkom by the end of the financial year, which ends in March, 2003, but analysts say the delay may have eroded some of the organisation’s value.
”It’s hard to try to time these things. The fact of the matter is they (Investec) want to get a listing and whether they do it now or did it two months ago, or five months from now, it wouldn’t have made a big difference,” Badenhorst said.
The bank said the issue would also have an over-allotment option of up to 15% of the total number of shares in the offer, which is open to both institutional and retail investors.
Investec has already started an international roadshow to market the offer, with conditional trading expected to begin on July 22 and full trade starting a week later.
Investment bank Schroder Salomon Smith Barney is sole sponsor and bookrunner to the share offer. Goldman Sachs and Investec’s own investment banking unit were working with Schroder Salomon Smith Barney in marketing the offer. – Reuters