AfriSam ties up deal with R6bn funding

AfriSam ties up deal with R6bn funding
Published: 22 July 2008

Construction materials group AfriSam said on Friday it was ready to grow its business now that it had secured ZAR6bn in equity investment funding from the Public Investment Corporation (PIC).
 
Last week the PIC approved a financing package worth ZAR6bn for black-owned AfriSam to replace a bridge financing facility provided to AfriSam by Holcim last year.
 
The move marked the completion of the transfer of 85% of Holcim’s shareholding to the Afrisam Consortium. The sale of the 85% stake, announced last June and worth ZAR16,4bn, was seen as the biggest empowerment deal at the time.
 
The PIC said it would make a ZAR200m equity investment and contribute ZAR4,5bn in preference shares, and the balance would be debt instruments. The investment would give the PIC 20% equity in AfriSam and two seats on the board. We have been so focused on getting funding, but we are happy that this is behind us now, AfriSam’s deputy chairman, Mofasi Lekota, said on Friday.

In the original structure of the transaction we always had provision for an equity investor, he said. The coming of the PIC at this time is most welcome as it finally completes the deal, and it means we focus our attention on growing the business. When Holcim announced the deal, it drew controversy as SA was then on the verge of a construction boom and cement demand was rising.

Analysts said then that rather than exceeding the terms of the country’s empowerment charter, the sale to AfriSam could be seen as an exit strategy for Holcim from Africa. The deal was seen as the largest change of control and black ownership deal, unlike deals that have been criticised for giving blacks only ownership without control. But with the controversy behind it, AfriSam is getting down to business. There are many opportunities we are looking at in Africa, and we are looking at organic growth and possible acquisitions in the future, Lekota said. He said R2bn had been approved for capital expenditure in the next five years.