Listing

ETHOS CAPITAL ANNOUNCES ITS INTENTION TO FLOAT ON THE JSE MAIN BOARD

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:

• raise capital to enable Ethos Capital to implement its Investment Strategy (as outlined below); and
• provide a liquid access point to enable public market investors to obtain an exposure to a diversified pool of unlisted assets and participate in Ethos Capital’s long-term growth prospects.

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.”

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

• Primary Investments: commitments to various funds to be raised and managed by Ethos Private Equity (“Ethos Funds”) during their respective fund-raising processes;
• Secondary Investments: acquisitions of existing Limited Partner interests in existing Ethos Funds;
• Direct Investments: acquisitions of interests in underlying investee companies alongside Ethos Funds to the extent that the Ethos Funds require co-investors in the underlying investee companies; and
• Temporary Investments: investments in a portfolio of low-risk, liquid debt instruments (including South African government bonds and other similar, low-risk, liquid instruments) for cash management purposes.

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 generating superior returns. 

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 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.