{"id":2916,"date":"2020-05-04T18:43:24","date_gmt":"2020-05-04T18:43:24","guid":{"rendered":"https:\/\/thefinanceghost.com\/?p=2916"},"modified":"2020-05-04T18:43:24","modified_gmt":"2020-05-04T18:43:24","slug":"imperial-is-almost-a-pure-play-african-business","status":"publish","type":"post","link":"https:\/\/thefinanceghost.com\/index.php\/2020\/05\/04\/imperial-is-almost-a-pure-play-african-business\/","title":{"rendered":"Imperial is almost a pure-play African business"},"content":{"rendered":"
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T<\/span>here was an interesting announcement out of Imperial Logistics (JSE:IPL) today, especially considering JSE companies were scrambling for “hard currency exposure” just a few years ago.<\/span><\/div>\n<\/div>\n
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???????????????????????????????? ???????????????????? ???????????????????????? ???????? ???????????????????????????????? ???????????????????????? ???????? ???????????? “???????????????????????????? ???????? ????????????????????????”<\/span><\/h4>\n<\/div>\n
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Conglomerates have been out of fashion for a while. Investors prefer pure-play businesses that allow them to take specific exposure to an investment theme.<\/div>\n
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For example, until a couple of years ago, Imperial offered shareholders exposure to a variety of logistics and automotive businesses in several countries. That’s great, unless for example you only want to invest in African logistics exposure.<\/span><\/div>\n<\/div>\n
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This is typically the reason for “conglomerate discounts” which result in holding companies trading at a discount to the sum-of-the-parts i.e. less than the individual companies would be worth if sold off separately.<\/span><\/div>\n<\/div>\n
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A journey to purity<\/h4>\n<\/div>\n
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In late 2018, Imperial unbundled Motus Corporation, passing the baton of its automotive business to shareholders.<\/span><\/div>\n<\/div>\n
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Now, another significant step has been announced, as Imperial will sell its European shipping business that it acquired back in 1999. <\/span>The South American business, which is small relative to the rest, is still up for sale. Once that is also sold, Imperial will be a completely African business.<\/p>\n

Imperial is doing this to focus on its African strategy. It wants to be the “Gateway to Africa” in logistics and market access. That’s a refreshing change from South African companies scrambling to make offshore investments, often overpaying and taking on too much debt in the process.<\/p>\n<\/div>\n

The valuation is an enterprise value of \u20ac225m, which represents a healthy multiple of 11.5x EBIT (earnings before interest and taxes). That’s typical of the higher prices paid per unit of earnings in developed markets like Europe.<\/div>\n
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What did shareholders think?<\/h4>\n
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The share price was up 4.3% on an otherwise tough day for the market, so investors clearly appreciated management\u2019s strategic focus in challenging times ahead. <\/span><\/div>\n<\/div>\n
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These deals take months (and sometimes more than a year) to put together, so the work happened long before COVID-19 hit Europe. It’s a lucky break for Imperial, as it strengthens its balance sheet and exits a tough region just in time.<\/span><\/div>\n<\/div>\n
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Of course, all eyes will now be on what they do in Africa with the money…<\/span><\/div>\n<\/div>\n
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There was an interesting announcement out of Imperial Logistics (JSE:IPL) today, especially considering JSE companies were scrambling for “hard currency exposure” just a few years ago. \u00a0 ???????????????????????????????? ???????????????????? ???????????????????????? ???????? ???????????????????????????????? ???????????????????????? ???????? ???????????? “???????????????????????????? ???????? ????????????????????????” Conglomerates have been out of fashion for a while. Investors prefer pure-play businesses that allow them to take specific exposure to an …<\/p>\n","protected":false},"author":2,"featured_media":2917,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[26],"tags":[112,111,114,113],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts\/2916"}],"collection":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/comments?post=2916"}],"version-history":[{"count":0,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts\/2916\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/media?parent=2916"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/categories?post=2916"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/tags?post=2916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}