A Black Economic Empowerment (BEE) Consortium made of Kwande Capital and Zungu Investment Company (ZICO) has made serious inroads into the gas distribution market by acquiring a 51% stake in KwaZulu-Natal based operation Spring Lights Gas (SGL).
The transaction comes as one of the few sizeable BEE deals in recent times after a lull which set in about four years ago at the back of the global financial meltdown. However observers were now pointing out that the BEE deals market was showing signs of recovery.
The transaction worth over R350m was described as one of the most successful BEE ventures in South Africa’s energy sector by Nedbank Capital which funded the transaction.
Nedbank Capital provided R250 million senior debt funding, whilst its private equity arm provided R104 million as the anchor mezzanine equity funder.
“We are proud to have funded Kwande Capital in its majority acquisition of SLG. This transaction further demonstrates our commitment to providing funding in the clean-tech space as well as ultimately developing and growing the KZN economy.”
SLG was described in Nedbank statement as a prominent supplier of piped gas to industrial and commercial customers in Kwazulu Natal. The company utilises a growing pipeline network that covers major industrial hubs in Durban, Newcastle and Richards Bay, and is focussed on growing this market beyond the current reach of existing gas infrastructure.
SLG’s customer base includes some of the most prominent ‘blue-chip’ industrial companies in the country.
Kwande Capital is a 100% BEE owned and managed company with a primary focus on energy and FMCG investments. It is part of a group formed in 2004 to provide consulting services to the energy sector and trading of crude oil and liquids fuels. Its principals are Deon Dhlomo and Shakes Matiwaza.
Zico is an established investment company founded by prominent business man and general secretary of the Black Business Council Sandile Zungu. Zico has interest in mining, automotive and services industries. ZICO MD Tshego Sefolo said “We are pleased to have partnered with Kwande Capital in concluding an acquisition of one of the leading piped gas suppliers in SA”.
Market watchers will be opening their to see if this deal signals the return of robust BEE deals activity.