Many Cape Town-based shareholders can thank enduring empowerment company Brimstone for not sailing off into the sunset after a few investment successes - unlike some other iconic BEE groups. But Brimstone is hitting the high seas in an inspired deal that will see the company anchoring an empowerment consortium that is taking a strategic stake in shipping, infrastructure and logistics giant Grindrod.
Interestingly, around two years ago, Stellenbosch-based investment giant Remgro – whose conservative investment traits are shared by Brimstone – took an influential 25% stake in Grindrod. Grindrod, which has made recent forays into the agri-business sector via investments in Senwes and NWK – has diversified from its core shipping business to take in wide ranging logistics and infrastructure services (including railways and ports.)
The mechanics of the empowerment deal sees Brimstone – together with other BEE partners – making R1.6bn investment in Grindrod. The transaction results in the consortium– comprising Brimstone, Calulo Investment sand Solethu Investments (which was a major investor in Cape Town based rail engineering group Racec, which is now part of Grindrod) – owningbetween8%and 8,5% of the shipping and logistics group’s equity.
The deal adds a new dimension to Brimstone’s investment portfolio – which currently comprises a minority stake in private hospitals group Life Health Care, fast food franchisor Taste Holdings, fishing group Oceana as well as controlling stakes in clothing manufacturer House of Monatic, short term insurer Lion of Africa and frozen hake specialist Sea Harvest. Brimstone will pay between R450m and R495m for an interest of between 59,2% and 65,1% in the empowerment consortium.
Brimstone executive chairman Fred Robertson stressed the company had a proven track record of creating value for shareholders, establishing long term relationships and leading consortia. “Our partnership approach to investments has made us a BEE partner of choice and we look forward to expanding this model to Grindrod. This hallmark transaction signals our entrée into the infrastructure sector.” He pointed out that Brimstone’s investment in the BEE transaction would help to partially fund Grindrod’s capital projects, enabling it to grow and diversify its earnings base.
By Jenni McCann