Brimstone is on the acquisition trail

2011-08-27 15:32

Brimstone, the Cape Town-based black-owned investment holding company, intends to raise R1.45 billion from local banks to make acquisitions
and increase investments in its underlying operations.

The company plans to achieve this despite many others abandoning and curtailing their expansion plans because of the much-talked-about double-dip recession.

Speaking to City Press, chief executive Mustaq Brey said Brimstone would soon be combing local markets for high-quality businesses.

Said Brey: “Yes, we are looking for acquisitions, but there is nothing specific lined up at this stage. We are looking at South Africa, but it can happen that the companies that we acquire may have underlying international links.”

Safs Narker, an analyst at Metropolitan Asset Managers, told City Press that the move to make acquisitions at this stage was “opportunistic”
“This is because company evaluations are still quite good. So, these companies are well aware that they can acquire good companies very cheaply because of the double-dip recession,” Narker said.

Brey added: “The reason we are so confident is that we have invested in food companies, insurers and health insurance. People will always need food, even in the deepest of recessions. And this is the time people should insure their assets. This strategy is working well. We’d be loath to change it.”

Brey would not name any specific firm Brimstone was targeting, but admitted his company had asked for permission from shareholders to raise R1.45 billion. It expected shareholders to come back with a response by the second week of next month.

Brimstone has an impressive empowerment profile, with more than 50% of its economic value being in the hands of black South Africans.

It has about 3 300 shareholders, the majority of whom are individual black South Africans. Its board of directors are majority black South Africans and operational management of the company is said to be in black hands.

Brimstone employs about 1 300 employees in its subsidiaries and more than 19 300 in its associate companies. The company has investments in food companies Oceana and Sea Harvest; insurance companies Aon and Lion of Africa; and health insurer Life Healthcare.

In the six months to June, Brimstone posted revenue of R874 million, compared with R892 million for the six months to June 30 last year.

This week, it said sales and fee income from operating divisions rose 19% to R840 million for the six months to June 30 from R707 million in the comparative period.

Jakes Gerwel, chairperson of Brimstone, said this week that despite continued economic and political turmoil in international markets, the company remained cautiously optimistic of future prospects. 

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