African Empowerment Equity Investments (AEEI), which controls recently listed Premier Fishing & Brands and Ayo Technology Solutions, has an appetite for a bigger chunk of consumer brands giant Pioneer Foods.
AEEI, one of the few enduring empowerment counters on the JSE, already holds a 0.75% stake in Pioneer after participating in an empowerment scheme in 2012 when almost 29-million shares were issued to black investors.
AEEI’s empowerment stake is worth about R143m at the ruling Pioneer share price.
Responding to questions from shareholders at an annual general meeting on Friday, AEEI CEO Khalid Abdulla confirmed there would be interest in buying a bigger stake in Pioneer. He added that it might be an opportune time to mull such a deal as the Pioneer share price appeared to offer good value at current trading levels.
“But we’d still want a bigger discount on the share price. Our intentions will come to light in the next three to four months,” he said.
Shares in Pioneer, which owns household brands such as Sasko, Weet-bix, ProNutro, White Star, Safari, Ceres and Liquifruit, have tumbled from about R143 at the start of 2017 to R82 last week.
Tough economic conditions have squeezed consumers, causing the share prices of most food counters on the JSE to come under severe pressure in the past 18 months.
It seems AEEI could pitch to buy out other empowerment scheme participants in Pioneer when phase two of the black economic empowerent investment scheme expires in March.
The phase two empowerment scheme saw 28.6-million shares issued to black-controlled special purpose vehicles at R55.15- R58.05 a share.
AEEI is already a significant participant in the local food sector through its controlling stake in Premier Fishing & Brands, which has a strong focus on export products such as south coast lobster, farmed abalone and squid.
Independent analyst Anthony Clark said it could be a smart move for AEEI to look at becoming the BEE partner of choice by securing a 4% to 5% stake in Pioneer.
Aside from capitalising on a potential recovery at Pioneer, Clark also argued such a transaction would add balance to AEEI’s investment portfolio. The group’s portfolio is currently skewed towards Ayo, which is by far its biggest single investment position.