JSE-listed black empowerment company Sekunjalo Investments Limited says it as already found value in its shareholding in unlisted defence and security company SAAB South Africa. Sekunjalo took a 25% share in terms of voting rights and a 5% economic interest in SAAB in June for an undisclosed but reportedly nominal amount in June.
Sekunjalo, in its annual results released today, say it has increased its asset base to R807 million from R774 million in the year to August 31. “This was achieved by the subscription of the 5% economic interest in Saab SA, a national defence and civil safety company as well as increasing the value of our operating businesses,” the company said in a Stock Exchange News Service release.
“This acquisition led the way for other opportunities and will enable [Sekunjalo] to diversify its portfolio of investments to other sectors in the economy by virtue of it being a partner of choice.”
The group posted headline earnings per share of 2. 64c.
Sekunjalo CE Khalid Abdulla in the SENS announcement described the SAAB tie-up as “probably one of the most significant deals in [Sekunjalo’s] history.” He noted SAAB “is a respected multi-national that provides expertise across numerous private and public sector spheres from electronic warfare, sensor technology, command and control systems, training systems, radio communication, aviation and support solutions.
“South Africa is SAAB`s biggest market outside Sweden. The deal sees Sekunjalo securing 25% of Saab SA`s voting rights and a 5% economic interest with an option, linked to SAAB SA`s performance over the next five years to extend the economic interest to 25%.” A SENS announcement indicated the Sekunjalo investment – 372 SAAB SA shares – was for a nominal amount. Abdullah explained that Sekunjalo could not disclose too much detail around the deal (turnovers and profits) because of “competitive issues” affecting SAAB SA.
The timing of the SAAB deal could not be better according to Abdulla, as the company looks to expand into South Africa and Africa. “At a time when we are in the midst of a global economic rebalancing all eyes are on Africa with a largely untapped market of more than one billion people.”
Abdullah said the SAAB deal took Sekunjalo the best part of a year to negotiate, and was in line with the company’s promise of seeking out partnerships with major corporations. “I think a key to our success was that while we are only a partner at SAAB SA, they realised that did have experience in running our own businesses.” Abdullah told Fin24 he felt the Saab deal would provide further momentum to Sekunjalo’s deal flow. “We think we can deliver a few more deals of this nature.”
The Saab deal is the second deal under the Group`s Strategic investment arm, having signed a similar deal with British Telecoms SA, the local division of the UK telecommunications giant in 2008.
The company reported revenue of R436 948 000 for the year to August 31 across all its businesses up 9% from R399 481 000 for the year before. Gross profit was R315 923 000 vice R307 210 000 an total comprehensive income was R8 790 000 against a loss of R58 772 000 the year before.
Sekunjalo, chaired by majority shareholder Iqbal Survé, was founded in 1997 and listed on the Johannesburg stock exchange in 1999. It is a majority black-owned and black-controlled company with strong B-BBEE (Broad-Based Black Economic Empowerment) credentials. Current investments also span the fishing sector, information technology, healthcare and biotechnology. In April Sekunjalo was recognised as South Africa’s Top Empowerment Company by the authoritative Financial Mail/Empowerdex Survey. In 2007 the company was selected as one of the top 125 New Champions Global Growth Companies by the World Economic Forum (WEF).