PSG ventures into Africa
Stellenbosch-based PSG group has signalled its intentions to venture into Africa.
PSG ventures into Africa
CA could be another CIC
Botswana a base for African expansion
Stellenbosch-based investment group PSG has signalled its intentions to pursue African opportunities with an acquisition in Botswana.
CEO Piet Mouton says PSG will pay R300m to acquire CA Enterprises, a fastmoving consumer goods (FMCG) distributor which turns over R1,5bn in serving retailers and wholesalers in Botswana.
The CA business model is startlingly similar to a former PSG investment, CIC Holdings CIC, a Namibian-based FMCG distributor, was sold to Imperial Holdings about two years ago. PSG received R364m for its 50% investment in CIC, having invested R67m and received R24m in dividends.
In fact, it was the similarity to CC Holdings that drew PSG to CA Enterprises of Botswana. Mouton notes that “deal scouts” PSG Capital initially took the CA opportunity to Imperial. “When Imperial was not interested we decided to pursue the investment ourselves,” he says.
Mouton believes CA can be easily expanded into neighbouring countries. “It’s a business we understand well, and a business model we think we can replicate in Angola, the DRC, Kenya and Tanzania.”
CA distributes wellknown brands from large principals such as Distell, Amka, Unilever, Val Grand, Fatti’s & Moni’s, Tiger Brands, Adcock Ingram and Heineken.
CA has been run by Jagdish Shah and Ian Thomson for over 20 years. Mouton says existing management will be retained.
He says one of CA’s strengths is the ability to serve main centres in Botswana within 24 hours and remote areas within 48 hours through distribution centres in Gaborone and Francistown. “The combined carrying capacity of the two distribution facilities accommodates over 45000t of foodstuffs and household goods,” he says.
Looking at the bigger picture, the CA deal may be the first of many Africa deals pursued by PSG. Rumours suggest that PSG-controlled agribusiness investor Zeder Investments is also looking at new opportunities in Africa.
Mouton reckons PSG could look at forming a new division under PSG Africa, with a view to latching on to partnerships in various countries. “It’s important that our first deal is a good one. Nothing dampens investor enthusiasm like stuffing up your first investment.”
Mouton says a longerterm option may be PSG separately listing PSG Africa and raising capital.