Mathupha Capital, a black-owned investment company, will purchase Aveng’s rail business for 133 million rand ($9 million). This comes as a result of Aveng’s strategic review back in 2017, after which the company decided to dispose of Aveng Trident Steel, Aveng Grinaker-LTA and Aveng Manufacturing.
Construction companies in South Africa have been hurt by many years of stagnant economic growth. This has reduced public infrastructure spending, prompting some to sell assets or file business rescues.
In a statement, the Executive Chairman of Aveng, Eric Diack said “this is another step forward in our announced strategic intention to give effort to the sale of non-core assets for value. We believe Mathupha Capital has the necessary expertise and market knowledge and is therefore ideally positioned to steward Aveng Rail into its next phase of sustainable growth and development.
Aveng will establish a limited liability company called Aveng Rail NewCo, in which all assets including employees and borrowings relating to the business will be transferred. Mathupha Capital will then proceed to purchase Aveng Rail NewCo from Aveng. The company noted that proceeds from the sale will be used to increase liquidity and reduce Aveng’s debt.
Aveng Rail, which is focused on the development, construction, rehabilitation and maintenance of regional track work systems, owns and operates an extensive fleet of mechanised track maintenance equipment.