Vantage Capital Group, one of South Africas first black-owned and managed investment and private equity groups, has bought a 30% stake in Kwikspace Modular Buildings, Africas largest manufacturer of factory-built accommodation.
The investment by Vantage Capital in Kwikspace is off its own balance sheet. The acquisition is effective 1st December 2006.
Vantage Capital is primarily focused on private equity investment activities for its own account and for third party funds. It has investments in mining group Incwala and IT group DataPro. The group also recently launched the countrys first black-owned and independently run mezzanine fund, Vantage Risk Capital.
Kwikspace manufactures site-erected systems for a wide range of industries and applications, among them construction camps, offices, clinics, ablutions and schools. It generates revenues of around R300 million annually in South Africa and Africa.
Mutle Mogase, executive chairman of Vantage Capital, says Vantage was attracted to Kwikspace because of its impressive management credentials and quality brands.
"This is a business with long-established brands that include CI Parkhomes, founded in the early 1970s, and Zozo and Portacamp, which commenced operations in the late 1970s."
Mogase says Vantage will bring to Kwikspace its extensive management skills to assist it with its growth plans in the run-up to the 2010 World Cup.
"As an investment group we are well placed to provide management with the advice and resources to ensure the company can benefit from the increased infrastructure spend in the next two to three years."
Mogase also says Vantage will be working closely with management at Kwikspace to capitalize on its African ambitions.
"Africa is proving to be an increasingly lucrative market for Kwikspace and while Senegal, Angola and Zambia are currently exceptionally busy, several other countries are also clamouring for the company's products and services."
Dendy Post, Kwikspaces executive chairman, says the company would comfortably qualify for a JSE main board listing as it stands at present. Before listing, however, Kwikspace wished to arrange and bed down a black economic empowerment partner.
"Our deal with Vantage achieves this objective, as a result of which we shall in due course apply for a listing - either for Kwikspace or for SteelWood Africa, our holding company, which, in addition to its stake in Kwikspace, owns majority interests Armco Superlite and ABE Construction Chemicals."
An additional growth opportunity for Kwikspace, according to Mogase, is its rental fleet with as many as 2 000 units currently on hire.
Keith Coulthard, Kwikspace's CEO, says that the rental market is growing especially rapidly, thanks to escalating demand from the Gautrain project, the swiftly expanding power and mining sectors and powerful growth in infrastructural spending on education and health.
SteelWood Africa was launched in 1997, following a buy-out of six companies from Murray & Roberts, as a BEE group in the form of a partnership between management, a BEE consortium and an investor group.
Between 1997 and 2000, in the wake of rationalisation and disposals, the group was reduced to three companies. The BEE group exited in 2002.
"Being a forerunner in the implementation of BEE, the group has long recognised that empowerment is a social and commercial imperative to achieving economic transformation in South Africa," says Post.
"This is why in 2005 we sold 26% of our Armco Road Safety division to private black individuals. And it highlights our enthusiasm for the Vantage partnership."
Kwikspace produces ISO-certified panelised (Portacamp) and mobile (Parkhomes) accommodation units that vary in size from five to 1 000 square metres. Panelised units are transported in kit form and erected on site. Mobile units are fully assembled at the factory and then transported to site.
The main manufacturing facility is at Klipriver in Gauteng, with additional factories in Cape Town and Durban and a sales office in Port Elizabeth.
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