Newsletter No 16 / 7 May 2021
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TWIMS receives R180m for the advancement of manufacturing in SA, rest of Africa by Irma Venter
TWIMS campus The advancement of manufacturing in South Africa and on the rest of the continent has received a boost from four South African manufacturers. JSE-listed groups Illovo Africa, Metair and The Foschini Group (TFG), as well as local vehicle manufacturer Toyota South Africa Motors (TSAM), have pledged a combined investment of R18-million in the Toyota Wessels Institute for Manufacturing Studies (TWIMS). TWIMS, which as an academic partnership with the Gordon Institute of Business Science (GIBS), is South Africa’s only manufacturing-focused business school and research institution. The multiyear investment will specifically fund the creation of four dedicated research chairs. Each chair will focus on a particular issue relating to the advancement of manufacturing on the continent. “We hold that the only way for an economy to grow sustainably is through industrialisation,” says TWIMS and TSAM chairperson Dr Johan van Zyl. “Unfortunately, South Africa has lagged the rest of the developing world in harnessing manufacturing for this purpose, and it is even more pronounced for the rest of the continent. “We thank the corporate sponsors for their generous investment, which will go a long way towards addressing this issue.” TWIMS has identified four key areas for further research. They are African Trade and Industrialisation, Green Manufacturing, Future Manufacturing and Lean Management. These areas will now be funded by Illovo Africa, Metair, TFG and TSAM, respectively. “Our research shows that South Africa’s manufacturing sector has developed sub-optimally over the last two decades,” adds TWIMS executive director Justin Barnes, who is also an associate professor at GIBS. In the 20 years to 2018, South Africa’s average value addition per capita through manufacturing was only 0.5%, compared with 8% in Vietnam and 5.7% in India. “These numbers do not reflect the immense capacity for economic growth that lies dormant in South Africa and the rest of Africa,” says Barnes. “We urgently need to develop a passion for and commitment to manufacturing in order to unlock our economic growth and benefit from the rapid change in technology that we currently see around the world.”
Four Key Areas “Africa’s manufacturing sector is ideally positioned for significant growth across different industries on the continent, creating considerable opportunity for investment and sustainable jobs,” says Illovo Sugar Africa group MD Gavin Dalgleish. “As the continent’s biggest sugar producer, we are very excited to be partnering with TWIMS for the advancement of African manufacturing leadership and trade and industrialisation, which is an initiative that aligns perfectly with our Illovo purpose – ‘Thriving African Community.’ ” Dalgleish adds that improving the agroprocessing supply chain requires various manufacturing interventions, such as soil mapping and chemical applications by drone. “It’s about getting more out of each hectare of land, out of each litre of water.” Mbongeni Ndlovu has been appointed as the Illovo-sponsored head of African Trade and Industrialisation. “Given our exposure to the automotive industry and own efforts in adopting more environmentally friendly mobility options, we felt that sponsoring the Green Manufacturing programme is an excellent fit for Metair,” says Metair CEO Riaz Haffejee. Metair produces batteries and vehicle components. “In addition to the drive for more sustainable automotive products in operation and at the end of life, vehicle manufacturers are placing increasing importance on green manufacturing processes,” explains Haffejee. “This is a trend that is likely to intensify across industries in coming years and poses a very interesting opportunity.” Liesel Kassier has been appointed as the Metair-sponsored head of Green Manufacturing research. “Technology is advancing at an ever-increasing pace,” notes TFG CEO Anthony Thunstrom. “The subsequent disruption of manufacturing and management practices is both a threat and an opportunity for African manufacturers. “We hope that with our investment in the creation of a research chair in future manufacturing we will be able to help position the country and continent to benefit from this change.” “We recently acquired the Jet business out of Edcon,” adds Thunstrom. “That has close to trebled the number of units of apparel we’ll be selling in South Africa every year. “The majority of that will be sourced in South Africa and that means we’ll be needing more and greater manufacturing capacity in the country. “Our manufacturing challenge is that we have to be absolutely cutting-edge. Increasingly we are looking at big data and three-dimensional printing of some of our commodities, really embracing the next wave of manufacturing. “Three or four years ago, we were told categorically that we could never manufacture in South Africa at a price equal to the landed cost of product out of the Far East. The good news for a lot of the simpler product is that we can manufacture them cheaper locally.” Dr Kruschen Govender has been appointed as the TFG-sponsored head of Future Manufacturing research. “Manufacturers have to constantly innovate and adapt to remain viable and profitable,” notes TSAM president and CEO Andrew Kirby. “This is especially true given the many disruptions to our logistical infrastructure, electricity supply, labour force and raw material inputs. “To best address this, we need skilled managers that are well versed in the specific challenges of a manufacturing organisation. Toyota is the father of lean manufacturing and the practice of lean management.” Khavitha Singh has been appointed as the Toyota-sponsored head of Lean Management.
TWIMS Origins TWIMS was established in November 2018 as a way to address the shortage of business managers with manufacturing expertise and to support research, policy creation and the industrialisation of South Africa and the continent. The school was made possible thanks to an endowment of R56-million from the Toyota South Africa Educational Trust (TSAET). TSAET later made a second endowment of R70-million for the creation of a dedicated scholarship for students to participate in the GIBS manufacturing-focused Master of Business Administration (MBA). TWIMS has subsequently established a further scholarship for students from across the continent to attend the various manufacturing short courses on offer. Since welcoming its first cohort of manufacturing-focused MBA students in 2019, TWIMS has grown its campus with a new 80-seat Harvard-style auditorium, several academic break-out rooms, and a gym and swimming pool to complement the on-site accommodation. Moreover, TWIMS is the process of investing in a technology exploration centre that it calls a “Management Sandbox”. Earlier this year, the first cohort of GIBS MBA students completed their studies. At the same time, TWIMS welcomed the third group of MBA students, as well as its first Doctoral student. This brings the number of postgraduate manufacturing-focused GIBS students on campus to 80. EN
Pepkor raises R2.2bn in oversubscribed bond aution By Katharine Child
The owner of Pep, Ackermans and Incredible Connection will use the money to pay medium-term debt to improve its liquidity. Pepkor Holdings, owner of Pep, Ackermans and Incredible Connection, has raised R2.2bn in a bond auction as it seeks to diversify its sources of funding and reduce borrowing costs. The money will be used to pay medium-term debt due in 2022, which will improve the company’s liquidity and debt profile. The auction, held on Friday, raised R765m in five-year-bonds and R1.43bn from three-year-bonds. The company said the auction was over subscribed by 2.8 times. Pepkor CEO Leon Lourens said: “It is very pleasing to see such strong support from the local investor community for Pepkor. The confidence expressed in Pepkor is underpinned by the excellent performance our retail brands continue to deliver.” The group’s net debt sits at just more than R6bn, down from R14.1bn in March 2020. Last year, it sold men’s fashion retailer John Craig to the owner of footwear stores Studio 88, as the formal menswear seller had been underperforming and did not fit well with Pepkor’s discount clothing brands. It also sold its hardware stores under the Building Company brand to Cashbuild for R1.1bn, though the sale is awaiting competition authority approval. Pepkor’s most recent trading update in the half-year to end-March showed 8.8% growth at Pep and Ackermans as consumers continue to search for bargains and buy cheaper clothing, which makes up two-thirds of its revenue. It said HiFi Corporation and Incredible Connection saw high growth as people continued to buy computers and printers for working and schooling at home. As the R350 special relief Covid-19 grants end, it may begin to see a downturn in sales as consumers continue to be hard hit by SA’s weak economy. Business Day
EU, AFDEC partner to train Nigerian female fashion entrepreneurs
The African Fashion Development and Empowerment Centre (AFDEC) in partnership with the European Union (EU) and German Development Corporation (GIZ) recently commenced a upskilling programme in garment production to improve competitiveness and enhance income capacity of Nigerian female fashion entrepreneurs through the Nigerian Competitiveness Project. The programme, which kicked off in Lagos in commemoration of International Women Day, will last for two months. Adeola Ogunkolade, founder and executive director of AFDEC, said participants will learn how to enhance their businesses and improve their competitiveness within the fashion industry, according to Nigerian media reports. “They will also be taught how to manage and optimise the fashion product effectively, and also get acquitted with the fashion evolution and its direction. This is indeed the start of a true entrepreneurship for the Nigeria women-owned fashion/garment industry. This training also focuses on every aspect of the business from project production, commercialization to distribution and retail and a lot more to learn,” she added. F2F
Steinhoff – Pepco IPO Steinhoff announced that the launch the IPO of its subsidiary Pepco Group B.V. (“Pepco Group”) on the Warsaw Stock Exchange. The IPO will include a public offering of up to 101 343 568 existing Pepco Group shares, of which c. 98.8% is held by Steinhoff, (representing up to 17.5% of the total issued share capital) to retail investors and institutional investors in Poland and an offering to institutional investors in selected other countries within a price range of PLN 38 to PLN 46 (EUR 8.35 to EUR 10.11) subject to publication of a prospectus approved by the Netherlands Authority for the Financial Markets (AFM) which is expected to occur today. The price range implies an equity value of Pepco Group of PLN 21,850,000,000 to PLN 26,450,000,000 (EUR 4,800,445,000 to EUR 5,811,065,000). The amount of offered shares may be increased by way of an over-allotment option up to a maximum of 15,407,767 shares. The final amount of shares and the offer price are expected to be determined and published on or about 14 May 2021. The expected first day of trading on the Warsaw Stock Exchange will be on or about 26 May 2021. The Pepco Group is a subsidiary of Steinhoff and is a fast-growing pan-European discount variety retailer, serving over 50 million customers a month from over 3 200 stores in 16 countries. Pepco Group owns the PEPCO and Dealz brands in Europe and the Poundland brand in the United Kingdom and is Europe’s pre-eminent discount variety retailer in Europe. Further information on the IPO can be found on the Pepco Group website at www.pepcogroup.eu/investors
Pepkor – listing of new financial instruments Pepkor successfully raised R2.2 billion in the South African bond market following an auction held on Friday 30 April 2021. Strong demand from institutional investors resulted in an oversubscription of 2.8 times. The Domestic Medium Term Note Programme (“the Programme”) is part of Pepkor’s strategy to diversify its sources of funding and to reduce its cost of funding. Proceeds from the notes issued will be used to replace existing term debt due for repayment in 2022 – thereby strengthening the Pepkor group’s liquidity and debt repayment profile. On 28 April 2021, Pepkor reported that its net debt as at 31 March 2021 had reduced to R6.1 billion compared to R14.1 billion in the previous year. The reduction in net debt by R8.0 billion was facilitated by continued positive trading momentum and strong cash generation. Pepkor notified shareholders and noteholders that the JSE Ltd. has granted the listing of its PEP03 and PEP04 Senior Unsecured Floating Rate Notes effective 05 May 2021, in terms of its Programme dated 2 March 2020 and guaranteed by Pepkor Trading (Pty) Ltd.
Pepkor – listing of new financial instruments Pepkor successfully raised R2.2 billion in the South African bond market following an auction held on Friday 30 April 2021. Strong demand from institutional investors resulted in an oversubscription of 2.8 times. The Domestic Medium Term Note Programme (“the Programme”) is part of Pepkor’s strategy to diversify its sources of funding and to reduce its cost of funding. Proceeds from the notes issued will be used to replace existing term debt due for repayment in 2022 – thereby strengthening the Pepkor group’s liquidity and debt repayment profile. On 28 April 2021, Pepkor reported that its net debt as at 31 March 2021 had reduced to R6.1 billion compared to R14.1 billion in the previous year. The reduction in net debt by R8.0 billion was facilitated by continued positive trading momentum and strong cash generation. Pepkor notified shareholders and noteholders that the JSE Ltd. has granted the listing of its PEP03 and PEP04 Senior Unsecured Floating Rate Notes effective 05 May 2021, in terms of its Programme dated 2 March 2020 and guaranteed by Pepkor Trading (Pty) Ltd.
HomeChoice – integrated report, B-BBEE and AGM The 2020 Integrated Annual Report for the year ended 31 December 2020 is available online on HIL’s corporate website at: homechoiceinternational.com/integrated reports/. No change statement Audit report Notice of the annual general meeting Salient dates Availability of B-BBEE Compliance Report
Inventions that changed fashion once and for all Jeans… In the 17th century, the Italian city of Genoa exported a papyrus textile, which was soon called “gênes.” In 1873, entrepreneur Levi Strauss secured a patent to create the famous blue jeans. At the time, it was designed as men’s workwear: overalls with pockets for a knife and coins. Since then, jeans have become a favorite item of clothing worldwide. By the way, Strauss’s company is functioning to this day under the famous Levi’s brand. |
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