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South Africa's Private Equity Scales New Heights

Benchmark International’s South African office was proud to attend the unveiling of this year’s private equity survey conducted by the South African Venture Capital Association (SAVCA).

Once again, private equity in South Africa has demonstrated the robust nature of the local market by posting a significant increase in investment activity in 2018.

The survey reports the value of new and follow-on investments has reached R35.4 billion, more than double the annual average of R15.2 billion posted over the past decade.

The research has further revealed that Southern Africa’s private equity industry (comprising both government and private funds) boasted R171 billion in funds under management (FUM) as of 31 December 2018.

More pointedly, the facts allude to a significant spike in trade sales, which were the most popular transaction, equating to a value of R5.6 billion in the past calendar year.

This further solidifies the dynamic reputation of the local mid-market sector of the economy and bodes well for the near and mid-term investment cycle for South African business owners looking to grow, transform, or exit their businesses.

Additional key takeaways from the survey include:

  • R171 billion in funds under management (FUM)
  •  R12.8 billion was raised in 2018
  • 55. 5% of the funds have been earmarked for South African investments
  • Real estate comprised 15% of the value of all unrealized investments at 31 December 2018, with manufacturing and retail accounting for 11.6% and 10.8%, respectively
  •  Average investment deal size increased to R43.3 million during 2018, from R41.5 million during 2017

To obtain the survey results, SAVCA, along with its research partner Deloitte, surveyed 47 managers, representing 82 funds, with a mandate to invest in South Africa and in other African markets.

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Benchmark International has successfully facilitated the sale of Machine Cutting Services (MCS) to Montsi Investments

Benchmark International has successfully facilitated the sale of its client, Machine Cutting Services to Montsi Investments, a 100% black-owned family investment company operating in South Africa and Ghana.

Machine Cutting Services, based in Modderfontein, South Africa, offers on-site machining services, products sales and rentals to, inter alia, the power generation, petro-chemical, mining, paper and sugar milling, and heavy engineering sectors. The company is an agent and distributor of prestigious, global brands of on-site machining tools as well as top quality plumbing tools.

Montsi Investments recognised the value in adding MCS to their stable of investments, which includes companies such as aggregate producers in South Africa and Ghana. Through their acquisition of the company they plan to expand its geographic footprint in Africa and leverage the improved B-BBEE score to secure new business.

“With a prior attempt at selling the business by another advisory having been unsuccessful, I was beginning to think I’d never get to retire, but the Benchmark team really came through for me and delivered on their promise to assist me in finding succession for my business”, stated the seller Mr Derek Holliday, adding “I felt well supported by Johann throughout the sale process. His expert guidance was invaluable.” 

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“We knew that a completely fresh approach to a wider market would be required” says Johann Haasbroek, the Transaction Director at Benchmark International. “The buyer was identified through the Benchmark process and once we conveyed the unique advantages that they would gain by acquiring the business; such as the growth that could achieved though the company’s superior ability to navigate the South African legislation in which the company operates, the buyer saw the potential for growth and engaged.”

Encouraged by what the deal indicates about the South African M&A industry, Andre Bresler the Managing Director at Benchmark International, concluded “This transaction is testament to the ever-increasing maturity and success of the BEE industrialist and investor market where strong interest was forthcoming from a number of strategically motivated buyers with impressive portfolios and track records of success, capable of adding genuine synergistic value.”

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Benchmark International Facilitated the sale of AVIS Forklifts (Pty) Ltd (AVIS) to Sky Investment Holdings (Pty) Ltd through its subsidiary Tailifts South Africa (Pty) Ltd (Tailifts)

Benchmark International is pleased to announce the sale of AVIS Forklifts (Pty) Ltd (AVIS) to Sky Investment Holdings (Pty) Ltd through its subsidiary Tailifts South Africa (Pty) Ltd (Tailifts).

AVIS is an independent forklift company, established in 1970. With over 40 years in operation, it is well recognised as a pioneer in the forklift rental industry. The company has grown to provide a comprehensive range of services regarding materials handling equipment including forklift hire, forklift sales, transport solutions and side lifter facilities. The company’s infrastructure is geared toward providing its customers with a cost-effective materials handling solution.

Tailifts prides itself on the manufacture and maintenance of tail lifts that can be fitted to column, cantilever, foldaway and retractable lifts suitable for any industry. In addition, Tailifts is the sole distributor in Southern Africa for Zepro, Waltco and Del lifts, market-leading brands in Europe, the USA and the UK respectively. The company boasts authorised service and fitment agents in all of the main centres within South Africa and engineering staff are trained and certified ECSA engineers as well as registered lifting machinery inspectors.

 

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The transaction sets the groundwork for both businesses to leverage off of each other’s mutually advantageous basket of products and services while aggressively nurturing their newly augmented and combined national footprint.

Commenting on this, Andre Bresler of Benchmark Corporate South Africa said: “This is yet another transaction that demonstrates in such active sectors going to market in a competitive process unlocks real value beyond the balance sheet for buyer and seller alike. I could not be more pleased to see such uniquely suited entities joining forces, it has been a privilege for Benchmark to have been selected to advise such an iconic brand.”

On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.

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Benchmark International has successfully facilitated the transaction between Logicalis South Africa (Pty) Ltd and Clarotech Holdings (Pty) Ltd & Clarotech Consulting (Pty) Ltd.

Benchmark International is pleased to announce the completion of a transaction between Logicalis South Africa (Pty) Ltd and the Clarotech group of companies including Clarotech Holdings (Pty) Ltd & Clarotech Consulting (Pty) Ltd. The deal was concluded by the transaction team based at the mid-market M&A corporate advisory’s African headquarters in Cape Town, South Africa in August of 2018.

The Clarotech group of companies specialise in Information and Communications Technology (ICT) providing consulting, physical product and support services to businesses throughout Southern Africa. Operating since 2001, the company satisfies the need for advice, solutions and ongoing service. Clarotech’s aim is to simplify ICT by supplying relevant solutions of value through proven end-to-end methodology.

Logicalis is an international multi-skilled solution provider supplying digital enablement services. The business boasts a well-curated customer base where it advocates for some of the world’s leading technology companies including Cisco, HPE, IBM, CA Technologies, NetApp, Microsoft, Oracle, VMware and ServiceNow. The Logicalis Group has annualised revenues of over $1.5 billion, from operations in Europe, North America, Latin America, Asia Pacific and Africa. It is a division of Datatec Limited, listed on the Johannesburg Stock Exchange, with revenues of over $4 billion.

 

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The similarities in business strategy, culture and ethos between the two companies have made this acquisition a “natural fit”, says Colin Fair, Managing Director and owner of Clarotech. “For the past few years, the management team has been looking for a company who could be a partner for us, one that would allow us to create something special from the marriage. We have been seeking a 1+1=4 scenario that would benefit our customers and our staff. This is what Clarotech has found in Logicalis.”

Commenting on this, Andre Bresler of Benchmark Corporate South Africa said: “This transaction affirms many analysts’ predictions of a positive climate for M&A in the TMT sector for 2018. Whilst there was defined interest from both up and down the supply chain in this acquisition, the strong cultural fit and clear synergies offered by the ultimate acquirer were evident from the outset. It has been a real privilege to have a hand in such an outstanding result for such outstanding clients.”

On behalf of everyone at Benchmark International, we would like to wish both parties every success for the future.

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Benchmark International facilitates the merger of the off-site marketing division of Corporate Security (Cor-Secure (Pty) Ltd) and Off-site Monitoring (Pty) Ltd (OSM)

Benchmark International is pleased to announce the successful merger between the off-site monitoring division of Corporate Security (Cor-Secure (Pty) Ltd) and Off-site Monitoring (Pty) Ltd (OSM)

Established in 1984, Corporate Security has extensive technical knowledge and experience within the South African security industry. The company offers a range of security services, focusing on the design and installation of off-site monitoring (OSM) and other technically orientated security products.

Utilising select imported and local security products; Corporate Security offers a substantially more cost-effective security monitoring option boasting proven efficacy. The company’s 14-year investment in the Control Room has culminated in a state-of-the-art off-site OSM CCTV control station as well as an analytics system.

Off-Site Monitoring (Pty) Ltd offers its customers a premium 24-hour surveillance service for essential day-to-day systems and security.

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South Africa Team Expands Operations into Johannesburg

The Benchmark South African Office has experienced extraordinary growth in the ten months following the company’s investment in Cape Town in response to demand to grow the African operations. The team is therefore proud to announce the opening of its Johannesburg office, the largest city in South Africa and one of the 50 largest urban areas globally.

Strategically, this expansion positions the company’s additional operations near the heart of the country’s wealthiest province, a full three months ahead of schedule. The early establishment of an office in this node was a decision necessitated by the level of activity Benchmark is engaged in with clients and buyers alike, and demonstrates the company’s continued
commitment and growing presence on the continent.

As a country, and in the context of Emerging Markets, South Africa has unparalleled potential as a destination for direct investment and features as one of the most dynamic and rewarding emerging market economies across the globe. As an M&A target region South Africa was recently ranked as the 28th most attractive destination for inbound M&A transactions globally. (According to Zephyr, a product of Bureau van Dijk).

Benchmark International’s Johannesburg office is headed up by Johann Haasbroek who, having worked with many of the current Benchmark team in the past, has extensive M&A, Corporate Finance and Banking experience.

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What Makes a Company a Likely Acquisition Target?

A fascinating report has been published by Intralinks who, in conjunction with Cass Business School in London examined 23 years of data from almost 34,000 companies worldwide to identify the factors that make companies attractive M&A targets.

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Out of Africa: How the M&A Market is Evolving South of the Sahara

Benchmark International has recently opened a new office in Cape Town, South Africa (see 3rd July blog post), headed up by Andre Bresler and Dustin Graham. This is an exciting development for Benchmark International, in a dynamic evolving market.

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Benchmark International Expands Into South Africa

A Manchester-based M&A specialist has expanded into South Africa with the opening of an office in Cape Town.

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