The challenge
The Foschini Group (TFG) is a South African apparel retailer with more than 3 000 stores across Africa, UK and Australasia. Over the past five years, TFG has concluded a number of significant growth-orientated transactions with the support of RMB:
- 2015 – Phase Eight Acquisition R4.2-bn
- 2017 – Retail Apparel Acquisition R3.0-bn
- 2020 – Underwritten Rights Offer R3.95-bn
- 2020 – Jet Stores Acquisition R480-m
This year, TFG concluded two strategically important transactions, the first being the R3.95-bn rights offer and the second being the acquisition of JET Stores. RMB was appointed by TFG to advise it on the structuring, funding and successful execution of both transactions during a highly uncertain economic, operating and trading environment.
The RMB solution
RMB’s long-standing relationship with TFG management, our understanding of the TFG business and retail environment in SA as well as our experience and expertise in structuring and executing equity capital markets and M&A transactions meant that we were able to deliver an end-to-end solution to TFG. The solution involved interim financing arrangements to support the business during the initial stages of the Covid-19 crisis, assisting management to identify and structure the optimal solution to raise equity capital including a commitment to underwrite the largest proportion of the fully underwritten rights offer during a period of significant market volatility, and provide unique insights and advice to TFG relating to the acquisition of JET that enabled TFG to agree terms on the acquisition within a short period of time.
How did this enable the client
RMB underwrote the largest proportion of the fully underwritten rights offer. The underwrite de-risked the equity raise for TFG and provided certainty to the market that the required new equity capital would be raised. The new equity capital strengthened the balance sheet and positioned TFG to pursue potential growth opportunities in a retail environment severely impacted by Covid-19. Post the successful implementation of the fully underwritten rights offer, TFG was ideally placed to bid for JET Stores, which was being sold pursuant to the business rescue process at Edcon. JET Stores provides TFG with a strategically important entry into the value segment of the SA Retail market and enhances the market presence and footprint of the TFG Group. RMB’s knowledge of the JET Stores business, as well as its knowledge of the Business Rescue process, enabled TFG to move quickly to secure and ultimately close the acquisition of JET Stores.
| Client | The Foschini Group |
| Recent transactions with RMB | 2015 — Phase Eight Acquisition R4.2-bn
2017 — Retail Apparel Acquisition. R3.0-bn
2020 — Underwritten Rights Offer. R3.95-bn
2020 — Jet Stores Acquisition. R480-m |
| Sector | Retail |
| Capabilities | Equity Capital Markets
Corporate Finance and M&A |
| RMB's role | Financial adviser on the Phase Eight, Retail Apparel Group and Jet Stores acquisitions Joint global coordinator and underwriter for the Rights Issue |
| Country | South Africa |
