Libstar Woos Investors Ahead of South African Food Group's IP0

(Bloomberg) -- Libstar Holdings Pty Ltd. is targeting both South African and international investors to support a planned initial public offering as the food and household goods company seeks 1.5 billion rand ($122 million) to fund expansion.

The owner of Lancewood cheese and supplier of Woolworths Holdings Ltd. own-branded honey and spices joins glass-packaging maker Consol Holdings Ltd. in proposing to sell shares in Johannesburg next month. In addition to Libstar’s own fundraising, shareholders led by Abraaj Group Ltd. are seeking to cash in on the deal by selling down their stakes.

The timing of Libstar’s IPO was chosen to enable the company to demonstrate year-on-year growth in 2017, Chief Financial Officer Robin Smith said by phone. Earnings before interest, taxes, depreciation and amortization rose 15 percent to 940 million rand last year, while sales gained 10 percent. Investors are also more confident since Cyril Ramaphosa replaced Jacob Zuma as president in February, particularly in overseas markets like the U.S. and the U.K., he said.

Libstar set a price range of 12.50 rand to 16 rand a share, it said in a statement Tuesday. Shareholders could sell 1.9 billion rand worth of stock, based on the mid-point of the range and a minimum free float of 40 percent. The listing is set for May 9.

Abraaj, a Dubai-based private equity firm, will own 61.55 percent of Libstar at the date of listing, after taking a black empowerment deal into account. The Public Investment Corp., which manages South African state worker pension funds, will hold a 16.8 percent stake. Black empowerment deals are a way to respond to South African government initiatives to boost non-white participation in the economy.

Standard Bank Group Ltd. and JPMorgan Chase & Co. are joint global coordinators and bookrunners for the listing.

To contact the reporter on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Viljoen, John Bowker

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