The fruit of Zeder’s labour

The fruit of Zeder

SOME OF the Western Cape’s best known agricultural assets could be on the block.

PSG controlled agribusiness investor Zeder Investments recently indicated that it had received unsolicited offers for certain of its assets.

Zeder’s largest investments are seed business Zaad, fruit marketing specialist Capespan, The Logistics Group (TLG) and agriservices business Kaap Agri.

Zeder appears to be in the process of winding down after selling its majority stake in Pioneer Foods to multinational brands conglomerate PepsiCo. The group also recently sold off its holding in the Quantum poultry, egg and animal feeds business.

Zeder has showed no inclination to make new investments, and has recently concentrated on paying out special dividends and buying back its own shares.

Talk around the farm gate is that Capespan and TLG are most likely to be sold. Both businesses have enjoyed resurgence of late, and Zeder has increased its valuations on both entities.

TLG is now reckoned to be worth R1.325 billion (up more than R300 million from R1 billion a year ago), and Capespan is worth R1.17 billion (R1 billion a year ago).

Interestingly TLG was originally the logistics arm for Capespan’s fruit exports. TLG, however, started taking on third party business and shifted into handling general cargo.

This prompted a decision to split TLG out of Capespan, a decision that appears to have paid off handsomely.

Zeder said TLG continued to expand its services offering and capabilities to a broader customer and market base in southern Africa.

Recurring headline earnings shifted up 12% to R142 million, prompting a R36 million dividend. Zeder noted encouragingly that the lower trading volumes and negative effects of Covid-19 were of a short term nature, and a good recovery – with additional growth prospects on key African trade corridors – was underway.

Capespan reported recurring headline earnings of R75 million and declared a generous R50 million dividend.

Zeder said the improved results were largely due to a better performance within the South African and Namibian farming divisions. “The better production volumes and improved market pricing impacted positively on the group results, as did the more streamlined global marketing business, with resultant lower costs.”

The improved results show why TLG and Capespan have probably attracted suitors. The big question now is whether Zeder will be able to negotiate a premium price above the new valuations.

What happens with Zaad will be even more intriguing. Zaad has an international flavour, and with a value of R2 billion is Zeder’s biggest remaining investment.

Zaad managed recurring headline earnings of R181m, an increase of 2%. Zeder still believes the specialised agri-inputs market, and particularly the proprietary hybrid seed segment, remains attractive.

Zeder said Zaad had identified East and Central Africa as key growth areas for seeds and agrochemicals. The group recently acquired the EAS group of companies in Kenya.

Zaad, CBN suspects, will probably look at securing a listing on an offshore bourse…possibly after making a few more acquisitions to bulk up operations.

 

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