File picture: Denis Farrell

A consortium comprising listed black-controlled and managed investment company Brimstone and other black economic empowerment (BEE) partners has concluded a transaction to acquire an 8.3 percent shareholding in listed integrated logistics service supplier Grindrod for R1.6 billion.

Brimstone is the leader of the consortium with a 59 percent shareholding. Other consortium members are Calulo Investments (20 percent), Solethu Investments (13 percent), Safika Holdings (5 percent) and Adopt-A-School Foundation NPC (3 percent).

Calulo, Adopt-A-School and Solethu previously held shares in Grindrod subsidiaries, but have restructured their shareholding through the consortium at listed company level.

The proposed empowerment transaction, which signals Brimstone’s entry into the infrastructure sector, was first announced in April this year, but was still subject to the fulfilment of a number of precedent conditions.

Andrew Waller, the group financial director at Grindrod, said yesterday that the consortium had funded R1.2bn of the purchase price and Grindrod had vendor funded the balance of R400 million.

“Grindrod purchased the shares owned by the BEE parties in the various subsidiaries within Grindrod. These proceeds were used to re-invest in the consortium,” he said.

Waller added that Grindrod was looking through this transaction to address the “ownership” score on the new BEE scorecard, which required the group to look for further equity to lift the ownership higher than merely reinvesting the current BEE parties in the listed entity.

He said the 8.3 percent shareholding, when scored under the scorecard, took into account the extent of Grindrod’s non-South African business.

With about two-thirds of Grindrod’s business outside South Africa, the 8.3 percent shareholding translated into a 25 percent effective stake in the local business, he said.

Alan Olivier, the chief executive of Grindrod, said yesterday that the R1.6bn investment by the empowerment consortium, together with the R2.4bn raised through the issue of 96 million new shares earlier this year in an accelerated bookbuild, would be used to fund planned capital infrastructure projects.

Olivier added that Grindrod had been in business with Calulo and Solethu for some time and valued their contribution to the company.

He said Grindrod was also pleased to have Brimstone as the leading shareholder and looked forward to its valuable input.

Mustaq Brey, the chief executive of Brimstone, said the investment firm was continuously seeking investment opportunities that would create long-term value for its shareholders. The BEE transaction allowed it to establish infrastructure as a new focus area alongside the company’s portfolio of health care, food and financial services clusters. “It’s something we’ve been investigating for some time,” he said.

Brey added that Grindrod, with its diversified suite of well-placed quality assets, represented a long-term investment in African infrastructure development – an attractive and growing asset class.

“The BEE transaction enables us to acquire a meaningful stake on a leveraged basis and we look forward to contributing to the company’s ongoing success,” he said.

Olivier said the Adopt-A-School Foundation had restructured its shareholding from the subsidiary to the holding level, which would assist the foundation to continue its good work in transforming schools in underprivileged communities.

Grindrod rose 1.43 percent to close at R26.89. - Business Report