Old Mutual Private Equity (OMPE) and black-owned investment firm Sphere Investments (Sphere) have acquired Much Asphalt, with its management, from JSE-listed AECI in a R1.1 billion transaction that will be financed through a combination of debt and equity.
Much Asphalt is South Africa’s largest commercial manufacturer of asphalt and bituminous binders and emulsions, with its products principally being used in road surfacing. The company is the only player in the sector with a nationwide presence.
AECI Group CEO Holger Riemensperge said in a statement that together, OMPE and Sphere provided a platform for financial strength, market access and long-term success for Much Asphalt.
“This transaction is another significant step in our strategic journey and we are pleased with the outcome. The sale of Much Asphalt is a key component in the divestment strategy for AECI announced in November 2023,” he said.
AECI strategy has a goal of doubling the profitability of the core businesses – Mining and Chemicals – by 2026, and securing a top 3 global market position in Mining by 2030.
OMPE and Sphere said in a statement that the investment in road infrastructure, a key enabler of economic growth and job creation, aligned with the objectives of the government.
“This, combined with Much Asphalt’s strong competitive offering, means the company is well-positioned to play a meaningful role in South Africa’s road infrastructure spend over the medium to long term,” they said.
The transaction marked the first and anchor investment in OMPE’s newly launched OMPE Fund VI. OMPE and Sphere would partner with the management team over the investment tenure, and seek to “generate transformative growth and business transformation”.
OMPE co-head Jacci Myburgh said they had confidence in the infrastructure repair initiatives under the new South African government and they would actively look to invest behind sectors that they believed would recover to more normal levels over the medium to long term, compared to the volatile and abnormal past decade for the South African economy.
“An effective road network is critical to the exciting rebuild that is underway in South Africa, which should stimulate economic growth and lead to the creation of new jobs,” she said.
Burchert Johannes, investment principal at OMPE said Much Asphalt’s management team had seen the company successfully navigate through several industry cycles, and “we look forward to partnering with them and Sphere to pursue the company’s growth ambitions”.
Sphere director Mohammed Sabi said their investment in Much continued a 21-year track record of investing in “high quality businesses which supply critical goods and services to their customers”.
Much Asphalt MD Bennie Greyling said they were well-placed to benefit from the catch-up in the road infrastructure spend backlog in the country.
Old Mutual Private Equity, part of Old Mutual Alternative Investments, is one of the largest private equity managers in South Africa and over 24 years was a significant investor in privately owned businesses across key industries and sectors, including in Actom, Tourvest, Ti-Auto, Primedia, In2Food and 10X Investments.
Sphere, an investment holding company formed in 2023, has successfully partnered with the South African subsidiaries of major multinationals including Babcock International Group, Honeywell International and Pearson, and it has a diversified portfolio of assets in the engineering and infrastructure maintenance, custom software, industrial and education sectors.
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