The challenge
Pepkor has partnered with RMB since its listing in 2017, and proactively began with strategic financial planning in the light of the COVID-19 pandemic. RMB took a holistic view of the balance sheet, understanding Pepkor’s business profile and developed an integrated solution to create flexibility and resilience in the capital structure for Pepkor to continue the smooth operations of its business despite market uncertainties.
The RMB solution
The two-phased approach for Pepkor totalled R6.9-billion in capital raised over the space of nine months. Pepkor initially raised R1.9-billion in equity via an accelerated book build in June 2020, where RMB and RMB Morgan Stanley were joint global co-ordinators and joint bookrunners.
RMB then co-ordinated the refinancing of R5-billion debt funding where RMB was joint initial mandated lead arranger. This reduced Pepkor’s leverage and extended the debt maturity profile.
Both the equity raise and debt refinance were successfully concluded in their respective markets, with the pricing clearing at favourable levels for Pepkor. Despite the challenging market environment, the equity raise and debt refinance were over-subscribed.
This combination of transactions demonstrates RMB’s capabilities and commitment to its partnership with Pepkor in delivering a landmark transaction in the South African equity capital market and syndicated corporate loan market. Furthermore, RMB was able to solidify its position as Pepkor’s trusted adviser and demonstrate its unwavering support for a key primary-banked client.
Proven client results
The R1.9-billion equity capital reduced Pepkor’s debt levels and introduced several new South African and international shareholders into the register, further diversifying Pepkor’s investor base and improving their liquidity. Together with the R5-billion debt funding, this optimised Pepkor’s balance sheet flexibility and resilience, given the uncertain economic climate. This transaction gave Pepkor peace of mind to focus on customer service and streamlined operations.
| Client | Pepkor Holdings Limited |
| Deal value | R6.9-bn equity and debt funding |
| Sector | Retail |
| Capabilities | Equity capital markets, leveraged finance, debt arranging, co-ordination and syndication |
| RMB's role | Debt funding: joint initial mandated lead arranger, joint co-ordinator, joint bookrunner, funder Equity capital raise: joint global co-ordinator, joint bookrunner |
| Country | South Africa |
