22 Jun 2016 Bounty Brands builds scale for listings
Unlisted FMCG company, Bounty Brands, is gearing its business for a foreign and local listing in 2017 through acquisitions, several food related, that continue to build scale in the business.
Bounty recently concluded four acquisitions – food supplier Rieses Food Imports, the manufacturer of refuse and carrier bags Tuffy, the distributor of household cleaning products Goldenmarc and Footwear Trading, the distributor of fashion brands like Diesel and Levi’s.
These acquisitions, which are collectively worth R1.2-billion, bring Bounty closer to its ambition of bringing a company with a considerable scale to the JSE and London Stock Exchange.
Only founded in February 2014 by private equity group Coast2Coast (C2C), Bounty is already clocking up revenue of R3.2-billion and operating profit of R500-million after snapping up several niche businesses.
Bounty is also the owner of direct seller of rooibos-based skin and healthcare products business Annique Health and Beauty, apparel manufacturer Musgrave Agencies, Chappers Sports (which markets and distributes the range of Vans sneakers and apparel in sub-Saharan Africa and Tanzania), Cosmetix (which owns self-tanning range Caribbean Tan and distributes Catrice and Essence cosmetic products) and direct-selling company Table Charm.
The businesses are housed in Bounty Brands’ divisions; Bounty Wear (footwear, apparel, and accessories), Bounty Home and Care (cosmetics, fragrance, skincare and homeware) and Bounty Foods (food products). Given its fast-moving consumer goods focus, Bounty has been often likened to JSE-listed diversified consumer brands business AVI limited.
The acquisitive trajectory of Bounty in a short space of time is similar to that of JSE-listed branded healthcare conglomerate Ascendis Health, which was listed by C2C in late 2013.
Bounty has already tested investor appetite for its offering, having recently raised R300-million in a placement of shares with private investors that could be converted into equity upon listing.
Europe beckons
Its strategy is to grow beyond the R5-billion in revenue mark and R1-billion in operating before listing next year. Bounty CEO Stefan Rabe says getting there will entail organic growth of its existing businesses but a big part will be acquisitions.
“We are growing nicely in our areas of focus. With a balance sheet that C2C has because of the success of Ascendis Health, we are able to pursue bigger businesses which make it far easier to come to the market,” Rabe tells Moneyweb.
Bounty will largely focus on growing its presence in Central and Eastern Europe through acquisitions. C2C has established offices in the capital of Poland Warsaw and a management team pursuing complementary acquisitions.
Bounty has already made an offshore foray through its acquisition of Poland-based Sonko, a producer of rice, groats, and dry bread, in November. “We won’t be broad in Europe as we are in SA, where we focus on categories of food, personal care, apparel, and homecare. We will expand our business in a much more focused way and grow the food and personal care business.”
A number of acquisitions have been identified, but the company is discerning on opportunities. Bounty is attracted to businesses posting top line growth of 10% to 12% in markets such as Slovakia, the Czech Republic and Poland and less in Eastern Europe countries like Ukraine and Russia. The businesses should also generate earnings before interest, tax, depreciation, and amortisation (Ebitda) of at least R50 million to R100 million, Rabe adds.
Depending on rand movements, Bounty currently generates up to 22% of its income from its Polish Sanko business. Upon listing, Bounty is looking to have its international businesses making up 50% of its income and the balance being SA-based businesses.
Although its focus will be to drive gains in offshore markets, Rabe says the company is still focused on SA. Bounty is sniffing the market for a primary food manufacturing business, adding to its current local food businesses: food distributor Liberty Foods, and recently acquired Rieses Food Imports – which supplies brands like Serena, Offenau, Jemz and Sea Queen to SA’s retail market.
Source: MoneyWeb.co.za
Related reading:
SA’s Bounty Brands buys first local and overseas food businesses