Black empowerment company BlackStar Group has purchased a 40% stake in Fulcrum Solutions, as part of a strategy to enter the defence industry.Fulcrum Solutions has sold a 40% stake, valued at R20 million, to Johannesburg-based BEE company BlackStar Group.
Siga Capital, a corporate investment and advisory firm, set up BlackStar Group, an empowerment and investment company, in 2005, to invest in companies in the military industry.
The Fulcrum deal was initiated last year and approved this week, with BlackStar solely financing and structuring the deal.
Mandla Kumalo, chairman of BlackStar, says the acquisition was prompted by the company`s aim to become a leading player in the South African military, defence, safety and security industry through investments in other businesses.
“We chose Fulcrum because we are looking for a strong and well respected partner in the defence space and Fulcrum has a tremendous reputation,” says Kumalo.
Andre Wolmarans, CEO of Fulcrum, explains the company will now be able to access resources and markets that were previously not open to it.
“We see this as an opportunity to explore international markets. With Fulcrum as a solid delivery engine and BlackStar as a credible empowerment partner, both parties have value to add to the relationship.
“This is an opportunity to attract government`s business. The partnership will give rise to the consolidation of empowered businesses in the defence sector,” says Wolmarans.
BlackStar is evaluating four other investment deals in the defence sector and should make an announcement by the end of June, says Kumalo.
Although remaining tight-lipped about the deals, he says: “We intend to buy into businesses to create a super military and defence empowerment grouping that will compete with groups in the multimillion-rand defence sector.
As BlackStar grows its investments in the defence sector, he envisages the company will have the opportunity to work closely with government and parastatals.
“We hope this deal would help us grow, tap into international markets and use Fulcrum`s expertise to consolidate,” says Kumalo.
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