M&R sells off infrastructure and building business

02-11-2016
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Johannesburg - Listed construction and engineering group Murray & Roberts (M&R) has sold its southern African infrastructure and building business to a consortium led by the Southern Palace Group for R314 million.

Established in 2002, the Southern Palace Group is a wholly black-owned and managed South African diversified company that has a presence in steel products manufacturing and recycling, automotive trading and manufacturing, real estate and technology and telecommunications.

M&R group chief executive Henry Laas said yesterday that the transaction supported M&R's long-term strategy and created the first major black-owned infrastructure business in South Africa.

“We believe the transaction is in the best interests of both Murray & Roberts and the (infrastructure and building) businesses,” he said.

Chosen market

The chief executive added that the transaction was about M&R exiting a specific market sector but stressed the group remained committed to South Africa and the rest of Africa and would continue to support private and public sector clients in its chosen market sectors.

The disposal of the infrastructure and building business follows M&R reporting in August that it had decided to dispose of this businesses and Genrec, its steel fabrication and erection contracting business.

M&R last month announced the sale of Genrec to asset management, private equity and advisory firm Nisela Capital for R185m.

It said at the time these planned disposals were in support of the group’s vision and long-term strategy to be a leading multinational group by 2025 by focusing its expertise and capacity on selected oil and gas, metals and minerals, and power and water market sectors, which presented long-term sustainable growth potential to the group.

Lucas Tseki, the chief executive of Southern Palace, said they were delighted to have concluded the transaction that saw them acquiring a strong southern African asset with vast capabilities and a proud heritage of 114 years.

“We intend to build upon this impressive track record to the benefit of all of our key stakeholders.

“This acquisition is a key step in Southern Palace’s strategy of going beyond investment holding into operations. We look forward to partnering with the management team, with whom we intend establishing a long and profitable partnership,” he said.

M&R’s infrastructure and building business comprises eight divisions: Murray & Roberts Buildings (Gauteng), Murray & Roberts Western Cape, Murray & Roberts Infrastructure, Murray & Roberts Botswana, Murray & Roberts Plant, Murray & Roberts Developments, Concor Opencast Mining, Dynamic Concrete Solutions (Namibia) and the Murray & Roberts share in the Medupi Civils Joint Venture.

The transaction excludes M&R’s investment in the Bombela Concession Company, Bombela Civil Joint Venture and Bombela Operating Company, which built and operate the Gautrain rapid rail project.

It also excludes the building business in the Middle East, where current projects were expected to be completed by December next year and no new projects were being pursued.

Shares in M&R declined 1.08 percent on the JSE yesterday to close at R9.13.