MCG Industries, a business involved in the manufacture of plastic injection moulded products, has earned two strong equity partners namely Sasfin Private Equity and Zungu Investment Corporation (Zico).
Described as a leading privately-held investment company, Zico the investment company started by high flying businessman Sandile Zungu, also comes with Black Economic Empowerment (BEE).
A press statement released yesterday said Zico and Sasfin Private Equity (Sasfin), a wholly owned subsidiary of the JSE-listed company Sasfin Holdings, have recently acquired a sizeable share in MCG Industries for an undisclosed amount.
The statement said “As co-investor with Sasfin, Zico will have a significant interest in the business.” This adds to a string of deals announced by Zico in recent times signalling the maturity of the company from being a pure BEE play. Pure BEE deals, where companies, sell their shares to black investors purely for political considerations have dried up. This is partly a function of the post global financial crisis market lull but also reflect the fact that many mainstream corporations have already done BEE deals.
There might be a feeling that enough is yet to be done in the way of BEE but the pure BEE deals market is unlikely to return to its pre 2007 levels. This is a challenge to operators who after benefitting from earlier BEE deals wave failed to reposition themselves.
Zico seems to have done good in repositioning itself in this regard. The MCG deal comes shortly after Zico announced that it has acquired a stake in meat processing business Seemmann’s. Earlier in the group acquired a Nigerian manufacturer and distributor of fruit drinks and non-alcoholic beverages, Vital Products. Zungu is on record saying Zico is enroute to becoming a sizeable Africa wide investment holding company.
On the MCG deal, Zico CEO Tshego Sefolo said “MCG is a solid business with strong market position.”
MCG services customers in the beer, soft drinks, agricultural, dairy, bread and poultry industries. The company is said to have “predominantly blue-chip customer base.” These include companies supplying a product range which consist of plastic crate and containers, plastic pallets, as well as chairs designed for schools, auditoriums passenger trains and stadia.
Added Sefolo, “This acquisition presents us a solid platform on which we would seek to bolt on other synergistic businesses, additionally; we are pleased to have concluded the acquisition with Sasfin Private Equity, our partner in the business.”
The media release said “For MCG, the acquisition by Zico and Sasfin signifies a new era for the company, which has been in operation since 1956. Traditionally an operationally-focussed entity, MCG is currently intensifying its growth strategy to include product expansion, made possible through a licence agreement with the largest global manufacturer of injection moulds, German-based company Schoeller Arca Systems.”
This agreement gives MCG access to Schoeller’s global product range and research and development resources for future product lines. Market extension into the agricultural sector and specific opportunities for MCG to take its product offering beyond South Africa’s borders into the rest of Africa will also provide growth.”
Sasfin Head of Private Equity, Neil Eppel said “The acquisition of MCG by Sasfin and Zico is a significant milestone for the business and its growth prospects. We are excited to be supporting the robust management team of the business to achieve such growth prospects. Furthermore, we are actively exploring additional acquisition opportunities in the sector.”