Carrefoursa re-IPO plan on hold as retailer focuses on small targets - CEO
Carrefoursa [IST:CRFSA], the Turkish retailer, has put its re-IPO plan on hold as it focuses on absorbing acquisitions and growing organically and inorganically, according to CEO Mehmet Nane.
"Our advisers offered a re-IPO as an alternative to finance the TRY 429.6m (USD 166m) acquisition of Kiler Alisveris Hizmetleri [IST:KILER], but we decided to rule it out as our first option. We have a strong war chest to cover acquisitions," he said. "If there's a need, we'll choose long-term borrowing as an alternative."
However, a source familiar with the plan said the re-IPO option is still "on the cards" for the first quarter of next year. The timing of any share sale would be determined in accordance with market conditions, the source added.
Carrefoursa is a joint venture between diversified Turkish enttity Sabanci Holding [IST:SAHOL] and French retailer Carrefour [EPA:CA]. Sabanci holds 50.93% and Carrefour owns 46.19%; the remaining 2.05% is freefloat on the Borsa Istanbul.
An Istanbul-based analyst noted that a secondary offering would also allow Carrefour to reduce its holding and help the company access fresh capital.
The source said the offering’s size and structure have not been decided yet. "The share sale process could be similar to Kordsa Global [IST:KORDS], a fabric producer -- which is also a subsidiary of Sabanci Holding,” the source noted.
Sabanci ran an investor roadshow in April but postponed plans to place Kordsa shares because of market conditions. It completed the stake sale in late May, reducing its holding to 71.11% from 91.1%.
The analyst noted Sabanci had some TRY 800m (USD 272m) in cash, after the disposals of subsidiary Sasa [IST:SASA] and a 20% stake in Kordsa, and could back Carrefoursa’s acquisitions.
Carrefoursa, which runs 480 stores within Turkey, is focused on adapting newly bought stores from Kiler, acquired on 15 May. "Kiler’s acquisition will help to penetrate further in central Turkey," Nane said. The deal was closed on 30 June after approvals from the Competition Board. Through the acquisition, Carrefoursa added 190 supermarket stores to its portfolio.
The second quarter sales at Carrefoursa increased 12% year-on-year to TRY 861m (USD 304m) mainly through organic and inorganic store expansion. "New store openings temporarily burden Carrefoursa’s profitability. As those stores mature, their full potential will be reflected," a company report noted. The retailer plans to increase its store count to 750 and its revenue to TRY 5bn (USD 1.7b) next year. It posted revenue of TRY 3bn last year.
In March, Carrefoursa bought 29 supermarkets from Antalya-based hard discount retail chain 1e1 Market. “Carrefoursa and Migros [IST:MGROS] -- key players in the supermarket sector -- have started to focus more on proximity stores to penetrate the country in a more effective way,” Renaissance Capital analyst Mete Ozbek wrote in a research note.
“Hard discounters are losing their competitive advantage, as price differences between discounters and supermarkets are increasingly blurred and supermarkets focus on proximity stores,” Ozbek said.