HealthPlus Retail Group — Exit Strategy & Investor Returns
Exit pathways — strategic sale, IPO and recapitalisation — and the indicative investor-return analysis over the five-year horizon.
Section 14 · Business Plan
Exit Strategy & Investor Returns
Exit pathways — strategic sale, IPO and recapitalisation — and the indicative investor-return analysis over the five-year horizon.
14.1 Exit Philosophy
The HealthPlus capital structure contemplates three credible exit
pathways for equity investors, ranked by probability and base-case
timing: (i) JSE Main Board listing in Y4–Y5; (ii) strategic trade sale
to a global pharmacy or healthcare retail group; and (iii) secondary
sale to a long-duration financial investor. The plan is engineered to
preserve optionality across all three routes and to allow partial
liquidity at each.
one. We are deliberately listing-ready, sale-ready, and secondary-ready
by Y5.
14.2 Primary Exit — JSE Main Board Listing
A JSE Main Board listing in Y5 (target month 60–66) is the primary
planned liquidity event. By Y5, HealthPlus meets all JSE listing
criteria with substantial margin: profit history (3+ years of audited
profits), public float (>20% achievable on listing), subscribed
capital (>R 50M), and shareholder spread requirements. The business
will have the scale, free cash flow profile, and governance maturity to
support a public company valuation premium.
14.2.1 Listing Comparables
Listed JSE pharmacy retail comparables provide a robust valuation
reference point. EBITDA multiples have ranged from 9x to 14x over the
past five years across different market environments.
| Comparable | Market Cap | Y5 EBITDA | EV/EBITDA | P/E |
|---|---|---|---|---|
| Clicks Group | R 80–95B | ~R 6.2B | 12.4x | 24x |
| Dis-Chem Pharmacies | R 28–35B | ~R 2.3B | 11.8x | 22x |
| Ascendis Health | R 1.4B | ~R 0.4B | 8.2x | n/m |
| Adcock Ingram | R 6–8B | ~R 1.1B | 9.4x | 14x |
| Peer median | — | — | 11.1x | 22x |
| HealthPlus (assumed listing) | R 18–22B | R 1.62B | 11.0–13.5x | 17–21x |
Table 14.1 — JSE pharmacy retail listing comparables
(illustrative)
14.3 Secondary Exit — Strategic Trade Sale
In a scenario where market conditions disfavour a listing, or where
strategic interest emerges at a premium to listing value, a trade sale
to one of several plausible acquirers is feasible:
Strategic trade sales typically command a control premium of 20–35%
above listed peers, and have historically been the highest-return exit
route in SA retail (e.g., Massmart/Walmart 2010, Pioneer Foods/PepsiCo
2020).
14.4 Tertiary Exit — Secondary PE Sale
A secondary sale to a long-duration PE or sovereign-wealth-style
investor (Public Investment Corporation, GEPF mandate, GIC, ADIA)
provides a third liquidity pathway, particularly suited to anchor
investors seeking partial rather than full exit. This route is most
likely to be used as a partial liquidity event at year 4–5 ahead of the
listing rather than as a final exit.
14.5 Return Waterfall — Base Case
The base-case return profile assumes a Y5 JSE listing at 12.0x
trailing EBITDA on R 1,619M of EBITDA, implying an enterprise value of R
19.4B. After deducting net debt (R 488M at end of Y5) and adding cash,
equity value at listing is approximately R 18.9B.
| Return Calculation (Base Case) | Value (ZAR M) |
|---|---|
| Y5 EBITDA | 1,619 |
| Listing EV/EBITDA multiple | 12.0x |
| Enterprise value at listing | 19,428 |
| Less: net debt at exit | (488) |
| Equity value at listing | 18,940 |
| Equity invested (cumulative drawdown) | (1,200) |
| Mezzanine warrant settlement (4.5% diluted) | (852) |
| Equity value to ordinary shareholders | 18,088 |
| Money multiple (gross, 5-year hold) | 15.1x on the R 1.2B equity |
| Equity IRR — base case | 28.4% |
Table 14.2 — Base-case return waterfall (illustrative; assumes
full hold to listing)
14.6 Return Scenarios
Returns are presented across the three model scenarios (base, upside,
downside) and across two exit-multiple bands to capture market-cycle
sensitivity.
| Scenario / Exit Multiple | EV (ZAR B) | Equity Value (ZAR B) | Money Multiple | Equity IRR |
|---|---|---|---|---|
| Downside @ 9x EBITDA | 7.6 | 6.4 | 5.3x | 14.2% |
| Base @ 11x EBITDA | 17.8 | 17.3 | 14.4x | 25.6% |
| Base @ 12x EBITDA | 19.4 | 18.9 | 15.8x | 28.4% |
| Base @ 13x EBITDA | 21.0 | 20.5 | 17.1x | 31.0% |
| Upside @ 13x EBITDA | 32.7 | 32.4 | 27.0x | 41.2% |
Table 14.3 — Equity return scenarios (5-year hold to Y5
listing)
14.7 Investor Liquidity Mechanisms
Pre-listing liquidity is supported by three contractual mechanisms in
the shareholders’ agreement:
14.8 Dividend Policy
The Board adopts a no-dividend policy through Y3 (capital
reinvestment phase). From Y4, a progressive dividend policy is
implemented, targeting a payout ratio rising from 15% of net profit (Y4)
to 30% (post-listing). The dividend policy is subject to senior debt
restrictive covenants (no distributions until ND/EBITDA < 2.0x and 12
months consecutive positive FCF) and to maintaining the R 250M minimum
liquidity floor.
On the base case, the R 1.2B equity investment generates equity
proceeds of approximately R 18.9B over a 5-year horizon — a 15.8x money
multiple and 28.4% IRR. Even in the modelled Downside scenario at a
compressed exit multiple, equity investors still deliver a 5.3x multiple
and 14.2% IRR — comfortably above the cost of equity for SA retail. The
distribution of outcomes is asymmetric to the upside.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of HealthPlus Retail Group (Pty) Ltd.