JSE-listed Allied Electronics (Altron) is pursuing a potential unbundling and separate listing of its UK subsidiary, Bytes Technology Group.
Following a strategic review, Altron is mulling a listing and potential share offering of Bytes UK on the London Stock Exchange, with a secondary listing on the Johannesburg Stock Exchange.
The group aims to unbundle the remaining Altron shareholding in Bytes UK, post the potential share offering to Altron shareholders.
The primary listing of Altron on the main board of the JSE will be retained.
“In addition to the value created to date, through delivering on the One Altron strategy, the unbundling and listing of a fully independent Bytes UK has the potential to unlock further value for Altron shareholders and, at the same tim, to create a successful standalone business operating in the UK,” said Altron chairperson Mike Leeming and CEO Mteto Nyati in an update to shareholders on April 2.
Bytes UK has developed into a sizeable, standalone and profitable business, delivering a ten-year compound annual growth rate of 20% in revenue and 24% in profit before tax in pounds.
In the 2019 financial year, Bytes UK contributed 41% of Altron revenue and 23% of Altron earnings before interest, taxes, depreciation and amortisation.
“The board concluded that the true value of Bytes UK is not reflected in the company’s share price. This business has increasingly developed a growth trajectory and strategic levers that are different to the rest of the group and operates in a different geographical capital market with a highly rated peer group.”
Altron assured that it will reassess market conditions post completion of the required preparatory work, which is expected to take nine to 12 months, with the board to determine the best way forward if financial market conditions did not improve.
Altron appointed Rand Merchant Bank as the financial adviser and transaction sponsor in South Africa and is in the process of appointing an adviser in the UK to advise Bytes UK on the potential listing and potential share offering.