Specialist emerging markets private equity firm Actis has formed a consortium including an Old Mutual affiliate to acquire Alstom South Africa, an electrical engineering, manufacturing, di
Specialist emerging markets private equity firm Actis has formed a consortium including an Old Mutual affiliate to acquire Alstom South Africa, an electrical engineering, manufacturing, distribution and contracting business, for USD700m (ZAR5.16bn).
Rand Merchant Bank, a division of First Rand Bank, advised on the transaction, which was funded by a combination of debt and equity funding with Nedbank underwriting the debt component of the transaction.
Actis and Old Mutual Investment Group (SA) have partnered management and existing black economic empowerment partners, Kagiso, Tiso and a private black investor, in the company, which is expected to benefit from increased infrastructure expenditure in the South African power distribution sector.
The company has been operating in South Africa for more than 100 years and is well placed to play a key role in assisting the power sector in addressing the current backlogs in the electricity transmission and distribution networks.
‘Investing in South African infrastructure alongside a strong management team to create value underlines Actis’s core philosophy of partnership and driving sustainable development in emerging markets,’ says director Garth Jarvis.
Another Actis director, Jacob Hinson, says: ‘There is a shared vision to develop increased market share for the company and the black economic empowerment component is part of that process. This participation was a crucial element of the deal which further demonstrates our ongoing commitment to building black ownership in South African business.’
Mark Gevers, head of private equity at Old Mutual Investment Group (SA), says: ‘The company has an experienced management team, good relationships with their technology partners, and a loyal customer base, and this strength is reflected in the fact that it has performed strongly over the past five years.’
According to Mark Wilson, chief executive of Alstom South Africa, management of the company and of its operating divisions will remain unchanged. The co-operation, distribution, commercial and technology agreements with Alstom, Areva T&D and other principals represented by the company will remain in place.
As part of the transaction, the company will sell its Power Service subsidiary, which provides maintenance, spares and after sales services for turbines and generators, back to Alstom France, while the Repair Services business will remain with existing shareholders.
