South African investment firm Brait will raise up to $864 million in a rights issue for its latest round of acquisitions, as it jettisons its private equity model in favour of public capital markets.
By tapping shareholders directly for cash, Brait said it would be able to raise money more quickly and hold investments longer than the traditional private equity model allows.
Brait, which is also listed in Luxembourg, said in a statement it would use the 6 billion rand from the rights issue to fund investments in two privately held South African firms, retailer Pepkor Holdings and food manufacturer Premier Group.
Newly appointed chief executive John Gnodde told Reuters Brait could make one or two more such investments for an additional 6 billion rand in the next three years.
Brait is primarly interested in South African firms that target consumer spending, as well as industrial firms, he said.
"We still remain very confident and bullish about the future of the cash consumer in our country," he said.
Shares of the company initially dropped more than 9 percent on the news of the rights issue. By 1058 GMT they were down 4.6 percent at 21 rand.
Brait said it would issue up to 356.9 million new shares at 16.5 rand, based on a ratio of three new shares for every existing one.
The offer price of 16.5 rand represents a discount of 28 percent from the stock's 30-day volume-adjusted moving average as of Tuesday's close, according to Thomson Reuters data.
Following the rights issue, Brait will acquire 34.9 percent of Pepkor, and 49.9 percent of Premier. Pepkor owns a retail chain targeting low- to middle-income customers, while Premier sells bread, maize and other products.
Former Brait CEO Antony Ball will continue to manage one of the firm's existing private equity funds. However, Gnodde said the company had no plans to raise any more money from private equity investors.
Brait has a 20-year track record of managing private equity funds in South Africa and currently manages about 8 billion in private capital. The firm also manages hedge funds.