South Africa’s food range company, Rhodes Food Group (RFG) is planning to generate as much as R600 million ($55.9 million) in share sales as it considers listing on the Johannesburg Stock Exchange (JSE).

Rhodes will sell fresh stocks equivalent to 25 percent of its existing shares in an initial public offering (IPO). Returns are expected to go towards supporting growth and reconciling debt and shareholder funding, which arose from a management buyout of a 29 percent equity stake two years ago.

US-based Morgan Stanley & Co. and Renaissance Securities will serve as the joint global coordinator and book-runner while FirstRand’s Rand Merchant Bank will act as the transaction sponsor.

RFG CEO, Bruce Henderson explained in a statement that the offering will help the company strengthen its balance sheet and also fund additional investments. These investments are aimed at accelerating its strategic growth plan.

He explained that the group’s listing was not essentially a “game changer” but the ambition indicates the management’s view that private label brand penetration is on the increase.

RFG intends to grow organically and through acquisition. In 2013, it had acquired KAP’s iconic canned meat brand Bull Brand.

In the last year, Rhodes Food said its earnings before interest, tax, depreciation and amortisation (Ebitda) hit R195 million while its compound annual growth rate in earnings between 2011 and 2013 rose by 49 percent. The company also made a total of R1.8 billion sales in the previous year.

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