SENS: Ethos Capital – Intention to Float Announcement


18 JUL 2016

ISIN: MU0522S00005


EPE Capital Partners Ltd (the “Company” or “Ethos Capital”) has today announced its intention to list its issued A ordinary share capital on the main board of the securities exchange operated by the JSE Limited (the “JSE”), subject to market conditions and the requisite approvals by the JSE (the “Listing”).

Ethos Capital will list as an investment entity in the “Financials – Speciality Finance” sector of the JSE and will offer investors long-term capital appreciation by investing, directly and indirectly, in a diversified portfolio of unlisted investments managed by Ethos Private Equity (Proprietary) Limited (“Ethos Private Equity”), the largest private equity firm in sub-Saharan Africa.

Ethos Capital is looking to raise up to R2 billion and plans to issue up to 200 million A ordinary shares to selected and institutional investors in terms of a private placement (the “Offer”). A pre-listing statement including full details of the Offer and Listing will be made available in due course (“Pre-listing Statement“). Commitments of approximately R1.076 billion in aggregate have been received from selected investors, including Ethos Private Equity.

The main purpose of the Offer and the Listing is to:

Peter Hayward-Butt, Chief Executive Officer of Ethos Capital, said:

“We are progressing our plans to list Ethos Capital on the JSE. The listing will provide the market with a unique opportunity to invest in a diverse pool of unlisted small to medium-sized companies in funds managed by the Ethos Private Equity, the largest private equity player in sub-Saharan Africa.”

“Ethos Private Equity’s historical performance has consistently outperformed the listed benchmarks with 57% of its 91 realised investments having returned greater than three times the original invested capital, and 93% of realised investments having returned greater than twice the capital invested.”

It is anticipated that the net proceeds from the Listing will be invested in the following strategies (“Investment Strategy”):

Ethos Private Equity’s long-term success has been a result of institutionalising a set of core competencies, which underpin its investment approach. This approach has been refined to provide a flexible strategy, tailored to investing in South African and other sub-Saharan African markets.

Growth is a central principle of Ethos Private Equity’s strategy: value is added by actively transforming the strategy, operations and finances of investee businesses, striving to make them “best-in-class”. Through pioneering thought leadership, creativity and innovation, Ethos Private Equity has developed a long track record of sustainable investor returns. In its 32-year history, Ethos Private Equity has invested in 104 acquisitions of which 91 have been realised, delivering investment returns with a gross realised IRR of 37.4%.

Stuart MacKenzie, Chief Executive Officer of Ethos Private Equity, said:

“We’ve been investing in our franchise over the past five years, with a view to shifting Ethos’ strategic vision from a single-product, pure-play private equity model to become a diversified alternative asset manager.  The Ethos Capital listing, coupled with the launch of new Ethos Funds, enables the market to access a broad suite of actively-managed funds.  It is important to appreciate that we are not seeking to change our business model but rather to broaden both the opportunity set we can invest in; and the universe of investors that can access the funds we manage.  We will continue to raise capital from our existing investor base who will invest in our Funds alongside Ethos Capital.”

The current Ethos buyout fund (Ethos Fund VI) is approaching the end of its investment cycle and has a diversified portfolio and, as such, Ethos Private Equity intends to begin the capital raising process for Ethos Fund VII during the second half of 2016 or early 2017. Similar to Ethos Fund VI, the objective of Ethos Fund VII will be to invest in private companies with market-leading positions, an identifiable competitive advantage, strong cash flows and significant growth potential. This Fund will target companies with an enterprise value of between R1.5 billion and R7 billion, with investments of between R450 million and R1.0 billion in each opportunity.

Ethos Private Equity has recently launched the Ethos Mid Market Fund I, chaired by Sonja de Bruyn Sebotsa, and is in the process of raising capital for this fund. Ethos Mid Market Fund I is a black-owned private equity vehicle, which will invest in companies with an enterprise value of between R500 million to R1.5 billion and would seek to invest between R100 million and R350 million in each opportunity. The focus of the Ethos Mid Market Fund I will be on private equity investments in the mid-market space, co-investing as the B-BBEE partner alongside other Ethos Funds in certain transactions and benefitting from facilitated B-BBEE transactions with companies requiring a long-term B-BBEE partner that has capital to meet growth requirements. Sonja continues her commitments at Identity Partners and leads the collaboration between Ethos Private Equity and Identity Partners into the future.

Ethos Private Equity has acquired a High Yield and Mezzanine Credit platform and intends to launch a closed-end mezzanine debt fund dedicated to providing mezzanine and quasi-equity financing solutions to companies in southern Africa to meet their intermediate capital funding requirements.

On completion of the Offer, Ethos Capital intends to make an initial commitment to Ethos Mid Market Fund I, Ethos Fund VII and Ethos Mezzanine Fund I. In addition, Ethos Capital is expected to make a Secondary Investment in Ethos Fund VI.

As the proceeds raised under the Offer will be less than Ethos Capital’s commitments (ie, Ethos Capital will be over-committed), Ethos Capital will use the net proceeds of the offer, any realisations from its investments and access to a debt facility from time to time, in accordance with its investment strategy and investment pipeline, to meet these commitments, as and when they become due. It is possible, but not currently contemplated, that Ethos Capital will raise further capital from shareholders in the future, if the appropriate investment opportunities arise. 

The board of independent directors of Ethos Capital (the “Independent Board”) will be chaired by Yvonne Stillhart and is composed of experienced private equity professionals all of whom are independent of Ethos Private Equity. Ethos Capital’s investment committee will comprise non-executive directors Michael Pfaff and Derek Prout-Jones who have significant experience in the private equity industry.  The investment committee will review investment opportunities and make recommendations to the Board who will make the ultimate investment decision. The two non-executive directors on the Investment Committee have made commitments in the Offer, which equate to 6.48%, assuming the Offer is fully subscribed.

Peter Hayward-Butt added:

“Ethos Capital’s non-executive board has an extensive understanding of, and significant experience in, the private equity industry and will apply this experience in order to make optimal investment decisions for the Company.

“Ethos Capital has been set up to provide investors with the opportunity to build a long-term investment relationship with Ethos Private Equity. Significant care has been taken to ensure that the interests of Ethos Capital shareholders and those of Ethos Private Equity are aligned for the long-term and to ensure that there are no “fees on fees” in the structure. To strengthen the alignment of interests, Ethos Private Equity will acquire 5% of the A shares over time.”

In South Africa, the Offer is only being made to the selected and institutional investors referred to above on the terms and conditions set out in the Pre-listing Statement. Prospective investors may contact their professional advisers and/or brokers in relation to the eligibility requirements for participation in the Offer.

Rand Merchant Bank, a division of FirstRand Bank Limited (“RMB”) is acting as the financial adviser,  sole global coordinator, bookrunner and JSE sponsor in relation to the Listing. 

Ebene, Mauritius (with simultaneous circulation in Johannesburg)




RAND MERCHANT BANK (A division of FirstRand Bank Limited)