Wednesday, January 29, 2020

Sefalana on its way to South Africa

Sefalana’s entry into South Africa is due to be concluded in October 2017 pending a number of regulatory and procedural matters. The local mass retailer made this announcement last week Thursday on the Botswana Stock Exchange. Growth into South Africa will be through acquisition of a number of target supermarket and wholesale chains across the country.
 
At the beginning of the year Sefalana had shared at the Group’s financial results briefing that advancement into South Africa was to materialise in May.  It would appear that this initial deadline could not be met given the ongoing developments.  On the recent announcement relating to this expansion the Group stated that agreements have now been finalised between the Group and a consortium of companies in the fast moving consumer goods sector. The largest participant in this consortium is said to be the well-established buying-group, Unitrade Management Services (Pty) Limited (UMS). “Sefalana will invest R250 million in this consortium and will participate in the board of the consortium. The two groups look forward to leveraging off one another’s experience in the industry to grow this consortium into a sizable enterprise over the next 10 years. This investment is expected to generate a return that will significantly increase the profitability of the Sefalana group.”
Group Managing Director Chandra Chauhan had given details of making headway into South Africa on the backdrop of the capital the Group had raised whose shares had been “significantly oversubscribed” raising proceeds of P351 million. A sizeable amount of the capital was used to support the expansion into South Africa. Chauhan described the move into South Africa as directly beneficial to Botswana as to enhancing its contribution to the Group’s profitability. He had pointed out that the daily turn-over of the targeted stores record over a P1 billion worth of transactions. Prior to these unfolding developments the Group had successfully expanded into Lesotho, a transaction which was cited at P30 million funded from the proceeds that were raised. Lesotho opening took place in November 2016. Chauhan had said that the Group was to open two more sites in Lesotho but the expansion was dependent on the viability of sites that had been identified. 
The Group warned its shareholders that they must exercise caution when dealing in the Company’s shares until it makes further announcement. The weekly recommendation report compiled by local broking firm, Motswedi Securities, recommended Sefalana to investors as a stock to buy. The report cited the Group’s 52 week high at P30 and its 52 week low at P20. 
With South Africa coming into the picture, it will increase the Group’s regional footprint with other existing operations in Zambia and Namibia.

 

RELATED STORIES