Singapore state investor buys into SA’s Spar, as trend continues
Business Live - Jun 19th 2012, 09:02
South African retailers continue to pique the interest of foreign buyers, with the Government of Singapore Investment Corporation acquiring a stake in Spar.
Following the acquisition, the corporation now held 5,18% of the issued ordinary share capital of the company, Spar said in a Sens announcement on Friday.
Last year, US retail giant Walmart concluded a R16,5bn deal to buy SA’s Massmart.
Foreign investors are keen to tap into the growth potential that the African market offers when compared to other more developed jurisdictions such as Singapore. International investors own about 70% of Truworths, SA’s largest clothing retailer, from 67% a year ago, and more than 90% of Massmart.
Almost 60% of shares in Mr Price and 54% of Woolworths are owned by foreign funds, increasing from 51% for both stocks in May last year, according to Bloomberg data.
Spar largely acts as a wholesaler and distributor of goods and services to the independent members that operate under its brand. The group services 867 Spar stores, of which about 10 are corporate stores.
Nedbank Securities analyst Syd Vianello said Spar had been consistent and was a solid business. "Over the past 40 years it has achieved consistent earning growth, has stable margins and has one of the most efficient distribution centres in the country."
The government of Singapore is one of the biggest sovereign funds in the world, Mr Vianello said. It was also ranked among the world’s top 10 real estate investment firms in terms of assets under management.
"Spar is definitely doing something right. They created Tops and Build It, which have both become the biggest liquor and building supplies businesses respectively in the country."
Last month, Spar reported turnover growth of 13,6% in the six months to March, driven by strong growth in its liquor and building materials divisions.
Volume growth of 6,1% was experienced, Spar said. Tops grew turnover 19,7%, while the building materials division, Build It, reported growth of 19,2%.
Spar CEO Wayne Hook has said that it would open about 100 stores in the full year across its offering and was looking at opportunities in the petrol station forecourt business, as competition in the retail sector intensified.
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