The world is changing fast and to keep up you need local knowledge with global context.
It’s been a while since the smart money has been betting on South Africa. So yesterday’s R4.8bn takeover offer for Clover Industries by an Israeli-led consortium is notable.
True, there’s plenty to like about Clover as an investment. It’s great value even at a 77% premium the buyers have offered above the pre-deal share price. In the financial year to end June, Clover generated cash of almost R800m. It has low borrowings (gearing of 41%), a well known brand and a settled management team.
But that’s only enough to pique the interest. Foreigners need more before committing billions. During my spell at Absa in the mid 1990s, I spoke often with global investors and without exception 80% of their questions were about South Africa, only 20% having anything to do with the business.
There’s no doubt Clover’s bidders will be following an identical script. Even more so, perhaps, as this business is closely tied to agriculture and exposed to the seemingly controversial land question. That they have decided to put up almost R5bn gives us their answer. The smart money is returning to SA. Believe it.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.