Johannesburg - Swaziland-based Inyatsi Construction Group Holdings has delayed its plans to seek a listing on the JSE for at least a year.
Frans Pienaar, the chairman of Inyatsi, confirmed yesterday that a listing on the JSE was not totally off the group’s radar but was definitely delayed for at least the next year.
Pienaar said the primary reason for the delay was that the market in South Africa was not ready for a construction company to list to make it worthwhile for the current shareholders in Inyatsi to list the company.
He said the legacy of the construction industry in South Africa in regard to collusion and lack of transformation had “put a damper on the market’s interest in construction players”.
“The construction industry had a deadline to submit a (transformation) charter for the industry and they missed the date. As an industry, we are not presenting ourselves well in the market place,” he said.
Pienaar said one of the primary reasons Inyatsi was considering listing was to fund significant future growth.
He said Inyatsi’s concern was that if it decided to list, it would involve giving up a lot of the group’s independence.
“But if you are just going to change your shareholder make-up, it will make it more onerous on the business and if you then do not create the opportunities to get significant growth, it’s not worthwhile.”
Pienaar admitted Inyatsi’s success rate with contract awards in South Africa had been lower than they had anticipated and less than half it expected to secure.
But Pienaar stressed that in the rest of the markets it operated in Africa, the group could “fill any order book you want”, if it had the finance.
“There are huge amounts of projects where, if we were prepared to take 15 percent to 20 percent equity in a project, we could secure significant work. But we are a construction company… and it’s not our work,” he said.
Pienaar said Inyatsi had a total order book in excess of R3.5 billion, which technically gave the group a two- to two-and-a-half-year “window”.
“That is exceptional for us. Historically, if we had a six-month window, we would be happy. But a lot of that (order book) is under threat if the government’s don’t have or don’t get cash,” he said.
Pienaar added that two significant contracts awarded to Inyatsi in Zambia were on hold, while a third significant contract awarded to the group had not commenced because the collapse in the resources sector had limited the government’s cash flow.
He said there had been a huge amount of tender activity in South Africa, but the projects did not come to market despite the consultants submitting a short list to the client. Pienaar believed this was because of a lack of personnel and financial administration capacity.
He said the group this year had secured in a joint venture an about R140 million road rehabilitation contract from the SA National Road Agency Limited and an R200m road project in Limpopo.
Pienaar said the group had secured several projects in Swaziland, including two contracts together worth about R300m for the Sisoma rural water supply project; a R90m contract to upgrade the Ezulwini sewerage system; and an R800m contract to upgrade 17km of road to a dual carriageway freeway between Manzini and the new airport.
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