South African multinational Capespan has sold its entire 9.23% stake in Joy Wing Mau, one of China’s largest fruit distributors, saying it wants to focus on and drive further growth in its core business.
Joy Wing Mau was formed in December 2015 from the merger between Golden Wing Mau – in which Capespan held a 25% share – and Jovio.
This merger created a much larger, vertically integrated business, but in the process – and through subsequent actions in 2017 – Capespan’s shareholding in the newly merged entity diluted to 9.23%.
In March 2017, Capespan and Joy Wing Mau announced a new Hong Kong and Tokyo-based joint venture called Joy Wing Mau Asia, which absorbed Joy Wing May’s Asia business and has a sales footprint across the region. The two companies remain partners and joint shareholders in this joint venture.
Capespan’s 9.23% stake was sold to a consortium of Chinese investors for RMB 566 million (US$82 million).
“Capespan has over the years invested in a number of companies internationally in order to expand our footprint in geographically and commercially strategic regions. All our investments are of a strategic commercial nature, underpinned by a material shareholding,” said Tonie Fuchs, Capespan’s managing director.
“These partnerships, especially our relationship with Joy Wing Mau, have been key to Capespan’s success.”
Fuchs explained that even though Capespan’s partnership and commercial relationship with Joy Wing Mau remains strong, the dilution in shareholding “reduced the strategic influence that Capespan retained through this investment.”
“Capespan is not an investment holding company. We invest where we need, through greater strategic influence, to expand our market penetration for the benefit of our grower supplier customers,” he said.
“We also realised that, since our investment in Golden Wing Mau eight years ago, our commercial partnership has outgrown our investment. Our commercial relationship has flourished because we know and trust each other, not because of Capespan’s shareholding. Joy Wing Mau remains Capespan’s commercial partner, despite the sale of our investment.”
He added that Capeapsn remains “fully committed” to the Asian region.
In recent years, Capespan has invested heavily in growing its farming operations in Southern Africa and in technology within the fruit marketing and distribution division.
“Capespan is a producer and global marketer of fruit. That is our core business. We will use the bulk of the proceeds of this sale to strengthen our core business, with the aim to provide a more efficient and cost effective service to our grower and market customers,” he said.
According to Norman Celliers, CEO of Zeder Investments, the parent company of Capespan, the reinvestment of the bulk of the sale proceeds underlines Zeder’s commitment to Capespan.
“The reinvestment will considerably reduce the gearing of Capespan’s core businesses. It will stimulate business growth and reposition Capespan to focus on its primary operations,” he said.
Mau Wah Liu, chairman of Joy wing Mau, said: “Capespan has been our strategic partner for the last eight years and has contributed considerably to the growth of Joy Wing Mau.
“I would like to thank the management team and shareholders of Capespan for their support and contribution to the development of Joy Wing Mau. We continue to see each other as strategic partners in the supply and development of the Cape and Outspan brands in China.”