West Star to list by way of IPO

listing after acquiring two Red Star Wholesalers branches.
But the wholesale firm, which briefly traded as Red Star before rebranding in January, has now decided to go for an Initial Public Offering, as Red Star Holdings could not be relieved of its debts.
West Star chief executive Mr Ken Sharp said they were set to take the entire shareholding in Red Star Holdings in October last year, but postponed this to December due to the debt constraints.
All the same, by December 2011 Red Star Holdings parent company, starafrica, failed to relieve its subsidiary of the liabilities, prompting West Star to drop its plans to acquire a debt-free Red Star Holdings.
Red Star Holdings had been saddled with an estimated US$5 million debt and the company faced serious problems after its parent firm failed to raise funding, especially for working capital.
“After starafrica failed to sell us Red Star Holdings, we were left with the only option of doing a fresh listing. As such, Mr Emmanuel Munyukwi (chief executive of ZSE) has agreed to fully support us and is very excited by the new listing,” he said.
West Star will now undertake a fresh listing by way of introduction. The IPO is expected to take place within  the next 12 to 14 months.
West Star has enlisted Ernst & Young as auditors, Grant Thornton as accountants, New Africa as sponsoring brokers, Atherstone & Cook as legal advisors. The financial advisors are yet to be confirmed between Imara and Interfin Capital.
Mr Sharp said West Star would have authorised share capital of 500 million ordinary shares while 100 million shares would be in issue.
But by that time 20 million shares would have already been given to some of its customers under a loyalty programme where they receive 1 percent credit in shares for every US$1 000 spent at West Star.
The West Star boss said indigenous people would own 55 percent of the listed entity by the time the IPO is completed.
Within the next six months, some of the new shareholders will be able to start trading the shares privately until the IPO is carried out.
West Star hopes to open three to four branches before the end of the year and 20 branches countrywide by the end of 2013.
Mr Sharp said they had faced a number of challenges since entering the wholesale business, including pressure on margins, competition from traditional players and imports, which he said threatened job security as they evade import duty.
The firm has also faced supplier challenges, especially with regards to products on promotion, such as Mazoe Orange Crush.