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HomeChoice eyes equity raising to accelerate growth
Retail and financial services provider, HomeChoice, is considering an equity raising to fund future growth. The business, which holds a market cap of R4.7 billion, is looking to accelerate its digital transformation, expand its product offering, enhance customer experience and grow its technology and logistics infrastructure.
Shirley Maltz, group CEO, HomeChoice.
HomeChoice group CEO, Shirley Maltz, said In addition to an R800 million long-term funding facility already in place, the group is contemplating the placement of new shares to support its next phase of expansion projects. “We are planning further strategic capital investments, including new product developments, systems and platforms to enhance customer experience and analytics capabilities, roll out of customer showrooms following the success of our first showroom in Cape Town, and expanding our logistics infrastructure.”
HomeChoice’s relatively low PE ratio has largely been a result of the current concentrated shareholder register and lack of liquidity in the share. This is set to change with the announcement that the group is considering a capital raise and that the two main shareholders would at the same time, subject to favourable market conditions, sell down a portion of their shares to improve liquidity. The share issue is subject to shareholder approval at the AGM on 11 April 2018.
“This share placement is aligned to the group’s focus on improving its free float and share liquidity,” explains Maltz. “The placement will introduce additional institutional shareholders to the group, which will be beneficial to the free-float and liquidity in the company’s shares.”
Capitalising on digital retail
“We have exciting expansion plans and as a distance retailer we are very well positioned to capitalise on the growing trend in digital retailing. We intend to roll out a range of new showrooms across the country and neighbouring states, as well as smaller “click and collect” hubs to get even closer to our customers. We are planning to become a digital department store and a fintech platform with a wide range of offers focused specifically on our mass market female customer in southern Africa,” says Maltz.
Recently released annual results showed retail sales 17% higher at R1.7bn and loans up 17.5% to R1.5bn. Headline earnings shot up 23% to 509c per share with the full-year dividend up 21% to 191c per share. Maltz said the group consistently acquired more than 20,000 new customers a month and now had an active client base of 796,000.
