Trellidor lists to expand into South Africa's security market

MiX Telematics

28/10/2015 18:06

* Trellidor plans to expand into the rest of Africa 
    * Security firms list, expand as crime drives security 
sector 
 
    By TJ Strydom 
    JOHANNESBURG, Oct 28 (Reuters) - South African security 
barrier firm Trellidor Holdings  TRLJ.J  listed in Johannesburg 
at the lower end of its expected price range on Wednesday, 
joining a growing band of firms seeking to expand in a nation 
known for its high crime rate. 
    Trellidor, which makes and distributes custom-made 
anti-burglar bars for windows and doors, closed at 602 cents, 
valuing the company at 651 million rand ($48.08 million). 
    Shares, which opened at 620 cents, had risen as high as 650 
cents in early trading before paring gains. 
    The company will use the cash raised to buy smaller 
companies in the sector and expand into the rest of Africa, 
Chief Executive Terry Dennison told Reuters. 
    Trellidor, the only listed company in barrier security, 
joins tracking technology firms such as Cartrack Holdings 
 CTKJ.J , Allied Electronics Corporation  AELJ.J  and Mix 
Telematics  MIXJ.J  which have grown rapidly as South Africans 
seek to prevent crime. 
    In a country where the murder rate increased around 5 
percent this year from 2014 to nearly 50 per day, home safety is 
an obsession. Robberies at residential properties are up 5.2 
percent, according to government figures released last month. 
    In developed markets most of the business is from corporate 
clients but in South Africa private citizens account for as much 
as 90 percent of Trellidor's clients, said Dennison. 
    And despite weak economic growth, these firms keep 
generating new business as consumers purchase new assets. 
    "We are essentially a non-discretionary type spend, when 
there is a need people will invest in security," Dennison said. 
    Most free-standing homes in middle class and upper-middle 
class suburbs have some sort of barrier security, but as more 
South Africans move into gated communities they want more 
aesthetically pleasing deterrents or more layers of security, 
Dennison said. 
    Currently, the rest of Africa accounts for 11 percent of 
sales, and Trellidor wants to expand abroad. 
    "We see significant growth potential from investments in the 
rest of the African continent, where the African market for 
security is also accelerating as a result of urbanisation and 
growing home and asset ownership," Dennison said. 
    Security firms have proven an attractive investment in South 
Africa. Cartrack, which listed last year, has gained around 25 
percent in the past six months, benefiting from insurers' 
demands that new car buyers install tracking equipment.  
    "I like the space that Trellidor plays in; crime does pay 
and it's an escalating problem," said Vunani Securities' small 
and medium market cap analyst Anthony Clark in a note.     
    ($1 = 13.5409 rand) 
 
 (Additional reporting by Lynette Ndabambi; Editing by James 
Macharia and Jon Boyle) 
 ((tj.strydom@thomsonreuters.com; +27 11 775 3150; Reuters 
Messaging: tj.strydom.thomsonreuters.com@reuters.net)) 
 
Keywords: SAFRICA TRELLIDOR HLDG/LISTING