South African furniture, electronic goods and appliances retailer Lewis Group has opened the book building process for its initial public offering and listing on the JSE Securities Exchange South Africa (JSE), in which it plans to offer to the public 40-million ordinary shares of one cent each, plus up to an additional six million shares as part of an over-allotment option.
Lewis owns the retail chains Lewis Stores, Best Electric and Lifestyle Living, with about 460 stores across South Africa, Botswana, Namibia, Lesotho and Swaziland. It also owns Monarch Insurance, a subsidiary offering insurance products to customers.
The group targets the middle- to lower-income market segment (LSM 4 to 7), selling its goods mostly on credit. Lewis Stores is South Africa’s largest furniture chain (by store numbers), with 400 stores in total, while its Best Electric chain trades from 47 specialist electrical stores and Lifestyle Living targets a more upmarket income bracket with 18 furniture and electronic-goods stores.
The offer, which opened on Tuesday and is set to close on September 29, is being made to institutional investors in South Africa, the private clients of Investec Securities Limited in South Africa, and selected institutional investors in other jurisdictions. UBS Investment Bank has been appointed as sole bookrunner of the offering, while Cazenove and Investec Bank are acting as co-lead managers.
The road show kicked off on Monday, with Lewis management heading to the United Kingdom for discussions with potential UK and European investors. The offer price is expected to be announced on September 30 and the settlement and listing date has been set for October 4.
The group’s upcoming listing on the JSE results from a decision by its long-time 100% shareholder, the UK-based GUS Holdings, to divest part of its interest in Lewis. Between 25% and 40% of the company’s shares will be listed, depending on the amount of commitments received from investors — both offshore and local.
For the year to the end of March 2004, Lewis (via GUS plc) reported a 13% increase in sales to £160-million, while operating profit rose 11% to £43,5-million. Its operating margin improved from 27,2% to 27,8%. — I-Net Bridge