On todays eBizWires, Nick Snow chats to Stefan Rabe from Coast2Coast about their new venture: Bounty Brands-
Following its success in the listing of Ascendis Health, investment house Coast2Coast has launched a new venture focused on the fast-moving consumer goods sector. The subsidiary, named Bounty Brands, includes former Pick n Pay CEO Nick Badminton as its Non-executive Chairman. Bounty Brands has already spent over R550-million acquiring its first three businesses with combined revenues in excess of R500-million. This is just the beginning of the acquisition trail, as Bounty Brands is aiming for a main board listing on the Johannesburg Securities Exchange (JSE) in the next three years.
Coast2Coast has over 25 professionals in its investment team and was founded in 2007 by Gary Shayne and Cris Dillon. It plays an active ownership role in the companies it buys, driving acquisitive, synergistic and organic growth. Coast2Coast listed Ascendis Health in the pharmaceutical sector in November 2013 – with its share price rising 50% in the first year. Ascendis currently has a market capitalisation of close to R5-billion, of which Coast2Coast still holds 45%.
According to Stefan Rabe, Managing Director at Bounty Brands, the relationship between Coast2Coast and Bounty Brands will follow the same dynamic as between Coast2Coast and Ascendis. “Bounty Brands is the operating platform that Coast2Coast will use to invest in the non-health consumer goods sector.” He says Bounty Brands is focusing on three areas: clothing and footwear in its Bounty Wear division; personal care, cosmetics, skincare and household brands in its Bounty Home & Care division; and food and beverages in Bounty Foods.
Bounty Brands’ first three acquisitions are: direct selling business Table Charm, footwear and apparel company Chappers Sports Direct, and cosmetics company Cosmetix. Rabe says Bounty Brands invests in successful entrepreneurial businesses that have a proven track record and a good management team. “We focus on brands that are defensible, recognisable and have a market-leading presence. We do extensive research and if we like a sector, we aggressively pursue complimentary brands and businesses.”
Table Charm distributes three main brands: the Table Charm range of homeware products, Zonke healing creams and Style fragrances. Products are marketed and distributed in South Africa and neighbouring African countries. He says, “Established over 40 years ago, Table Charm is one of the top five direct selling businesses in South Africa. Its Table Charm brand is aspirational, to be used for special occasions. Zonke and Style are more recent brands, but now make up close to 25% of revenue.”
Chappers Sports Direct distributes VANS footwear and apparel, a rapidly-growing street-wear brand, to leading retailers across Southern Africa and is currently available in over 1000 stores. It also owns several VANS Concept Stores, with three more stores due to open in the next year. Founder of Chappers Sports Direct, Nigel Chapman, has been appointed Managing Director for Bounty Wear and has been tasked with identifying complimentary brands for potential acquisition.
Cosmetix was founded over 10 years ago by Clive Roberts and his wife, Cindy Nell-Roberts (former Miss SA). It owns several brands, including SA’s market leading self-tanning range, Caribbean Tan, and is the licensed distributer of the Essence and Catrice range of colour cosmetics. Essence is currently the market leading colour cosmetics brand in Germany. Locally its growth has outstripped rivals and it is already the top selling brand in 1 major retailer.
More businesses are likely to be added to Bounty Brands before the end of the first quarter of 2015, bringing total revenue to around R1-billion and operating profit to over R200-million. Over the next three years, the group aims to grow revenue to over R5-billion and operating profit to close to R1-billion. This growth is expected to come primarily from South Africa, but it is already assessing opportunities in Africa and beyond. Bounty Brands will then list on the JSE in 2017. “There are many significant opportunities in the consumer goods sector. Our acquisition model allows entrepreneurs to benefit from our future listing and this attracts good businesses to Bounty.”
He says, “We want to buy good businesses, but at a fair price. We believe in a platform strategy, where we buy a significant business in an attractive sector and then bolt on other brands to this platform to ensure economies of scale. We plan to have a limited number of platforms, with Apparel, Cosmetics and Direct Selling already in place.”
The Bounty Brands team is made up of Rabe, Chief Financial Officer Peter Spinks and Nick Badminton as Non-executive Chairman. Rabe says, “Nick has been a mentor to the executive team and a great sounding board for investment ideas. Considering that most of our brands will be sold through retail, his understanding of this sector has been invaluable.” Spinks joined the group in January 2015. He was previously Financial Director for one of AVI’s divisions. “Peter comes with the right pedigree. Apart from the traditional CFO responsibilities, Peter will be tasked with preparing Bounty for the upcoming listing in 2017.”
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