It might not have been officially communicated, but the general sense in the market was that private equity investor Capitalworks might linger for longer at consumer brands group Premier, the owner of Blue Ribbon bread and Snowflake flour.
Last week Capitalworks exited — save for a sliver of a shareholding — its significant minority position in Premier, recently enlarged by the acquisition of smaller consumer brands conglomeration RFG Holdings. Capitalworks swapped its 44.5% stake in RFG for just under 10% of the enlarged Premier as recently as March.
The sale was executed via an accelerated bookbuild, which was oversubscribed multiple times and saw a significant slug of shares going to a major shareholder in the form of retail tycoon Christo Wiese’s Titan Premier Investments.
Presumably Capitalworks —which recently announced a significant new private equity fund targeting investments of R5.8bn in the fast-moving consumer goods, industrial services, logistics, retail, hospitality and tourism sectors — has significant new transactions on its screens.
The unexpected exit, though, does slightly rattle the strong growth narrative at Premier.
At face value, Capitalworks has sold at a price not too far from Premier’s record high — and the voracious appetite for the scrip from other key investors suggests confidence in longer-term prospects.
But on the other hand, Capitalworks, a knowledgeable investor in consumer industries, is not hanging about to see the benefits of Premier trading off a bigger brand portfolio, the cost savings from merging in RFG’s operations or the impact of the new bakery investment. A number of market watchers maintain that with RFG bedded down, Premier could easily maintain a strident pace at bottom line. Time will tell.