Take advantage of new listings
One of the benefits of having and managing your own share account is that you are able to take advantage of “new listings” or initial public offerings (IPOs) and private placements.
Most of the time, investors love getting involved in these for one of two reasons.
Firstly, a longer term investor likes to get into a new listing early, to attempt to maximise growth potential.
Take Vodacom for example.
When it broke away from Telkom and listed on its own in 2009, it listed on its opening day at R59.50.
It’s 2016 and all-time high was R170.
The second reason is to try to make a quick buck, as these new listings usually have strong rallies on their first day on the main board.
Investors who get in early can often scoop a quick profit as the price rises on the new excitement.
I’d like to tell you about a new listing coming soon, for which we have been waiting for a while now and about which I am quite excited.
This “Private placement” means they can choose who gets an allocation of stock.
If you have a good, reputable broker, they should be able to “shmoose” the sponsoring broker to get involved early.
The new private placement I am talking about is pharmacy group Dis-Chem.
This is why I think this one will be a goodie…
Last week they announced their intention to file for their listing on the JSE’s main board.
I expect the prospectus and the details around the listing to be released in the next week or so, so it’s soon.
Dis-Chem is 66.9 per cent owned by the Saltzman Family trust and, boy, is this chain competitive.
The other shareholders include key management, with 23.4 per cent, while the balance is held by an unnamed financial investor.
Dis-Chem have more than doubled their store base since 2010, and tripled since 2008.
They currently have 101 stores in South Africa and two partner stores in Namibia.
They have already agreed leases for 29 new stores and are already starting to open these for business.
A successful listing will see Dis-Chem joining the ranks of their already listed peers, Clicks, MediRite (operated by Shoprite Holdings) and Pick n Pay Pharmacy.
Clicks is much larger than Dis-Chem and already has a significant footprint and operates 496 stores and 384 pharmacies.
Dis-Chem, through this listing, plan to increase their market share and this will concern their competitors.
What makes Dis-Chem different to their competitors, is that the company has extensive investments in its supply chain and distribution business.
This means that, through their in-house businesses, they are able to open new stores more cheaply.
Not only that, but Dis-Chem, through their wholly-owned subsidiary CJ Distribution, have a wholesale business serving pharmacy retailers and Dis-Chem’s own retail pharmacies, which they plan to expand.
Some analysts expect the group to pull in market capitalisation of around R25-billion after coming to market.
As I mentioned, the company will soon be releasing full details on this listing, including how many shares will be issued and made available to the public.
That will dictate the listing price, but it is most certainly one I will be looking at very closely, so if you are looking to get involved in a new listing, this one has all the looks of a good opportunity.
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