AEEI set to benefit from SA-India deal

Cape Town 26-11-15 - CEO of AEEI Khalid Abdulla makes a annoucement at Worksop 17 in the Waterfront Pic Brenton Geach Pic Brenton Geach Picture Brenton Geach

Cape Town 26-11-15 - CEO of AEEI Khalid Abdulla makes a annoucement at Worksop 17 in the Waterfront Pic Brenton Geach Pic Brenton Geach Picture Brenton Geach

Published Jul 14, 2016

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Johannesburg - African Equity Empowerment Investment (AEEI), which owns a 25 percent plus one stake in Saab Grintek Defence (SGD), is positioned to gain from a deal between Sweden’s Saab and Tata Power Strategic Engineering Division (Tata Power SED).

Read also: AEEI acquires stake in Saab Grintek

SGD signed a memorandum of understanding with Tata Power during Indian Prime Minister Narendra Modi’s visit to South Africa last week. AEEI is the only local shareholder in SGD; the other 76 percent is held by Saab.

The agreement will see SGD being responsible for the transfer of technology for production in India.

Tata Power SED will manufacture a large part of the defence system in India, manage final assembly and will also be responsible for marketing the system locally.

AEEI chief executive Khalid Abdulla said: “We invest in companies with clear growth paths and Saab is one of them… It has been AEEI’s investment strategy to invest in growing businesses locally and abroad. This opportunity is beneficial for both companies and it will add to for job creation locally as well.”

AEEI paid R125 million last year for its stake in SGB.

Abdulla said: “Our relationship with SGD and Saab’s commitment in South Africa is bearing fruit and our South African expertise is now being exported to companies where we are supplying quality technology and products.”

AEEI has a market capitalisation of more than R1 billion and Abdulla is adamant the company is positioned for a major take-off in years to come.

“The company has grown from strength to strength over the years. We want to see the company acquiring international expertise in the next five to 10 years in order for the company to be a true global player,” said Abdulla.

SGD said yesterday that it was shifting its focus to some potential businesses in North America particularly in Canada, Europe, the Middle East and Asia Pacific in an attempt reach more untapped markets globally.

SGD chief executive Trevor Raman said: “If you look at our portfolio you will notice that we have achieved R1.3bn worth of sales annually and 75 percent of that comes from exporting our products. We have three customers abroad and our involvement with Tata Power will increase our exposure internationally. In the past we have achieved bigger sales in India and South America and this market opportunity will further entrench our business internationally.”

Raman said self-protection had become an important element in countries abroad.

“We are excited about the signing of this understanding. It is our strategy to take South African indigenous technology and products beyond local markets, with well-established expert partners who add value to our supply chain and open new markets,” he added.

AEEI shares rose 1.64 percent yesterday to close at R3.10 on the JSE.

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