JSE's Changing Face

DELISTING: AT LEAST 20 POSSIBLE BUYOUT TARGETS ON STOCK EXCHANGE

- Adriaan Kruger

For years, private investors and fund managers have complained that the shrinking number of listings on the local market is making life difficult. The days of newspapers dedicating a whole broadsheet to Johannesburg Stock Exchange (JSE) prices and statistics are long gone – less than half a page is all it takes today.

Several transactions that will result in the delisting of shares are currently underway. Adcock Ingram announced recently that it received a buyout offer, and its share price immediately jumped more than 20%.

Property group MAS, owner of multiple shopping centres in Eastern European countries, is apparently also working through a new offer, after Hyprop Investments pulled its offer.

In addition, offers for Barloworld and MultiChoice are being completed.

"We expect there are many more coming," says Richard Cheesman, a partner at investment company Urquhart Partners. The firm is in the process of setting up a special situations hedge fund to take advantage of buyout offers and other corporate activity.

Cheesman lists at least 20 possible targets on the JSE. These include Reinet, City Lodge Hotels, Quantum Foods Holdings, Telkom, Grindrod, Bell Equipment, Alexander Forbes, Mpact, and Rainbow Chicken, as well as the big Anglo American mining group.

"There are certainly plenty of interesting special situations at the moment. A few recent ones that stand out include MAS and Reinet, and we've had a particularly good year with Super Group. Other noteworthy stocks include Mustek (where Novus, backed by A2 Investment Partners, looks set to take control) and the potential buyout of Metrofile.

"Recent developments at Reinet, where more than 80% of the portfolio should end up being cash, open up intriguing possibilities. A large special dividend could be on the cards, potentially giving the Rupert family the means to buy out minority shareholders and retain the remaining private equity assets," he says.