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Johannesburg - South Africa may be winding down for the festive season but this has not dampened demand for shares in soon to be listed food and dairy producer Clover Industries (Clover), which will start trading on the JSE on December 14.
Group chief executive Johann Vorster told Fin24 that the R500m book building which commenced last week was "well over-subscribed".
Clover said it is listing to provide additional working capital and funds for its expansion.
The primary capital project for the group is dubbed Project Cielo Blu. It aims to reduce inefficiencies in the supply chain, increase profitability and expand capacity.
This will include plans to relocate production facilities closer to milk sources to reduce distribution and related costs. The project also looks at the expansion of key production and distribution centres and warehouses, to create the capacity needed to support medium-term growth.
Irshaad Paruk of Rand Merchant Bank, the lead organiser for the deal, declined to be drawn on how far the offer had been oversubscribed. He did indicate that "the book was covered and continues to grow".
He pointed out that the formal book-building process closes on Wednesday this week, and that more details would be made available shortly.
Paruk declined to comment on what price he expected the share to list at, pointing to the original prospectus which indicated a price of between R9 and R12 per share.
Asked whether Clover had been rushed into a decision to list and whether December was the most opportune time for a listing, Vorster pointed out that there had been talk of this happening since 1998. This had gained momentum in 2004, when it became a public company.
Until then, Clover had been a cooperative for members of the milk industry. It was subsequently unbundled, and by 2010 the company had delivered an operating profit for the year ended June 30 of R320.8m.
"It was relatively easy for us to convert from a private to a listed company," said Vorster.
Several analysts Fin24 spoke to indicated that they would be adopting a "wait and see" attitute to the new listing.
One concern was that Clover still had work to do in terms of tidying up its portfolio and making its supply chain more efficient, compared to peers such as Tiger Brands [JSE:TBS].
It was argued that Clover's business remained "more cyclical" than some of its mainstream food industry competitors.
Vorster, however, argued that Clover had grown beyond a milk industry business.
"We see ourselves as far more than just a milk company but rather a logistics business with 14 000 delivery points which we supply to. Having said that, we will never neglect milk where we have huge infrastructure," he said.
Data from Clover shows that the company is the market leader in several fields, including fresh and flavoured milk, feta and natural pre-packed cheese as well as dairy fruit mix and pure juice markets.
- Fin24
Group chief executive Johann Vorster told Fin24 that the R500m book building which commenced last week was "well over-subscribed".
Clover said it is listing to provide additional working capital and funds for its expansion.
The primary capital project for the group is dubbed Project Cielo Blu. It aims to reduce inefficiencies in the supply chain, increase profitability and expand capacity.
This will include plans to relocate production facilities closer to milk sources to reduce distribution and related costs. The project also looks at the expansion of key production and distribution centres and warehouses, to create the capacity needed to support medium-term growth.
Irshaad Paruk of Rand Merchant Bank, the lead organiser for the deal, declined to be drawn on how far the offer had been oversubscribed. He did indicate that "the book was covered and continues to grow".
He pointed out that the formal book-building process closes on Wednesday this week, and that more details would be made available shortly.
Paruk declined to comment on what price he expected the share to list at, pointing to the original prospectus which indicated a price of between R9 and R12 per share.
Asked whether Clover had been rushed into a decision to list and whether December was the most opportune time for a listing, Vorster pointed out that there had been talk of this happening since 1998. This had gained momentum in 2004, when it became a public company.
Until then, Clover had been a cooperative for members of the milk industry. It was subsequently unbundled, and by 2010 the company had delivered an operating profit for the year ended June 30 of R320.8m.
"It was relatively easy for us to convert from a private to a listed company," said Vorster.
Several analysts Fin24 spoke to indicated that they would be adopting a "wait and see" attitute to the new listing.
One concern was that Clover still had work to do in terms of tidying up its portfolio and making its supply chain more efficient, compared to peers such as Tiger Brands [JSE:TBS].
It was argued that Clover's business remained "more cyclical" than some of its mainstream food industry competitors.
Vorster, however, argued that Clover had grown beyond a milk industry business.
"We see ourselves as far more than just a milk company but rather a logistics business with 14 000 delivery points which we supply to. Having said that, we will never neglect milk where we have huge infrastructure," he said.
Data from Clover shows that the company is the market leader in several fields, including fresh and flavoured milk, feta and natural pre-packed cheese as well as dairy fruit mix and pure juice markets.
- Fin24
