PSG wants place on Top Fix board?

Johannesburg - PSG Capital's recent take-up of shares in AltX-listed scaffolding specialist Top Fix suggests it seeks sufficient shareholding to turn around the company's operations, said an analyst.

Since November 2008, PSG Capital has spent R15.6m in eight separate transactions to build up a 17.1% stake in the company.

Questions were raised whether PSG was snapping up millions of shares for a third party (possibly buying a secretive holding for a stakeholder), or collecting shares to support management ahead of a possible delisting.

Top Fix is similar to formwork and scaffolding company Form-Scaff - owned by Waco International - which was delisted and privatised about eight years ago after a buy-out led by Ethos Private Equity.

According to media reports, Waco was due to return to the JSE in 2006. However, the listing was halted when Hong Kong-based CCMP Capital Asia, JP Morgan Partners Global Fund and senior management bought the company for R5.4bn in January 2006.

Stanlib small-cap fund manager Lance Krowitz said management has not capitalised on Top Fix's assets. While not wanting to speculate on PSG's intentions with Top Fix, Krowitz said PSG - as a private equity player - could see this as an opportunity for a turnaround.

For the six months to end-December, Top Fix reported a 33% increase in revenue to R162m. However, a 47.6% rise in cost of sales saw operating profit fall 11.7%.

Sasha Naryshkine, a market watcher from asset management firm Vestact, said PSG would need a big shareholder percentage to delist Top Fix. According to information provided by McGregor BFA, Paladin - in which PSG owns a majority (74.9%) stake - holds an 18.18 % stake in Top Fix. PSG's executive chairperson Jannie Mouton, who is also the chairperson of Paladin, holds a 0.7% stake in the group.

"If PSG does take the company private, it has a private equity vehicle which would give it the opportunity to sell the business to someone in about three or four years' time as a private company," said Naryshkine.

Krowitz said: "I think PSG wants to up its stake to 25% or 30%, so that it can put its people on the board of Top Fix to make strategic decisions and turn the company around. I don't think PSG has been instructed by management to buy shares for a possible delisting."

BoE fund manager Leith Wimble told Fin24.com: "Clearly, it is a buyer's market out there, so if PSG is accumulating it must have clearly done its homework on the stock and its prospects and is willing to take a five-year view on it."

Top Fix chief financial officer James Barker told Fin24.com he had no knowledge of a delisting. "There are many deals happening, but I don't see any delisting."

He said that when he speaks to PSG, the firm "sees Top Fix as a good investment".

- Fin24.com