SOUTH AFRICA – Ethos Private Equity a subsidiary of Ethos Capital, a leading investment firm managing private equity and credit investments, have partnered with Brait SE, providing a strong platform to maximise value through the realisation of assets in Brait’s portfolio, and returning capital to shareholders in the medium term.
The partnership will entail Ethos Private Equity’s Fund VII, in conjunction with Ethos Capital, investing R1.35bn (US$91.48m) in Brait, via an equity capital raise of up to R5.6bn (US$379.4m), including a R5.25bn (US$355.7m) rights issue, to help refinance and restructure existing Brait debt.
Ethos Fund VII will contribute R750m (US$50.8m) and Ethos Capital will invest R600m (US$40.6m) to the overall R1.35bn (US$91.48m) capital injection, by taking up part of Titan’s portion of the Brait rights issue of R1bn (US$67m) and an additional R350m (US$23.7m) from other Brait shareholders who do not take up their shares in the rights issue, a specific issue of new Brait shares.
The exact pricing will depend upon the rights issue pricing, but based on the maximum Brait rights offer price, Ethos’ effective in-price will be a maximum of R10.81 (US$0.73) per Brait share.
Stuart MacKenzie, CEO, Ethos Private Equity, said: “This strategic equity partnership and our role as the new advisor to the Brait board empower us to bring a completely fresh perspective to the Brait portfolio and to drive a revised investment strategy;”
Ethos Private Equity will become the new advisor to the Brait business, replacing the existing Brait advisory contract for a significantly reduced fee structure with effect from the date the Brait rights offer closes which is expected at the end of February 2020.
Peter Hayward-Butt, CEO, Ethos Capital, said: “Co-investing in Brait alongside Ethos Private Equity’s Fund VII provides our shareholders with access to a high-quality asset base that complements our existing investments, adding sector and geographic diversification.”
Anthonie de Beer, Ethos Fund VII Managing Partner, said: “We’re pleased to have been able to secure this unique investment opportunity for Fund VII investors. Ethos’ value creation approach is centered on aligning shareholders, the board, and management teams of portfolio companies around value maximization strategies, and then focusing on the execution thereof.”
In order for Ethos to meet its commitments in the Brait Equity Raise, Ethos Capital will undertake a renounceable rights offer to raise equity of R750m (US$50.8m). Ethos Capital has received commitments from existing Ethos Capital shareholders and other investors to fully fund its R600 million (US$40.60m) portion of the Brait Equity Raise.
The Ethos Capital Rights Offer is expected to commence in late January 2020 and be concluded in February 2020.