Solid growth ahead for new concrete listing Afrimat

concrete product group afrimat has announced its intention to list on the main board of the jse on november 7, aiming at a market capitalisation of r600m.

the company is the result of the merger of two similar groups, one (lancaster) in kzn and the free state and the other (prima) in the eastern and western cape. both companies are more than 40 years old.

ceo andries van heerden says the two entities are compatible and offer synergies. afrimat will be acquisitive and hopes to clinch a significant acquisition in the near future.

the merged company aims at a taxed profit of r62,8m in the year to february 2007, up from pro forma earnings of r47,3m in 2006. the historical pe will thus be 12,8 and the forward pe 9,5. that compares to the historical pes of two recent listings, esor and wearne on altx, of 23,6 and 26,7 respectively.

according to van heerden, fund managers at the road shows are enthusiastic and it should not be difficult to privately place 25m shares at r5 a share.

that will bring in r125m of new money, of which r75m will be new capital and r50m will go to the backers and vendors. of the r50m, r25m will liquidate debt of bee partners, who are locked in for seven years.

bee players, mega oils and kwezi mining, have 21% of the equity, exceeding mining charter requirements and qualifying the company for large government and provincial contracts.

van heerden says mining licences are the biggest barrier to entry to competitors. the merged group has 18 quarries, 12 ready-mix plants, eight precast factories and five mobile crushing and readymix plants. it has a 120-strong fleet of trucks worth r244m on the balance sheet. after the listing, there will be no net debt.

the financial director is hendrik van wyk. peter corbin, a former director of concor, is the third executive director. marthinus von wielligh is non-executive chairman.

francois du toit is co-founder and the driving force behind prima for more than 40 years. other non-executives are gillian jiyane, loyisa dotwana and monty kaplan.

afrimat is enthusiastic about prospects. it points out that the sector is worth r74bn. it already has a contract to supply ballast for the expanded richards bay coal line. it is also well poised for low-cost housing.

the group’s auditors are moores rowland of cape town, bridge capital is the adviser and sponsor.