Barloworld wants to sell its Avis stake next, following takeover deals of its logistics businesses

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Barloworld CEO Dominic Sewela
Barloworld CEO Dominic Sewela
Barloworld
  • Barloworld has been getting rid of non-core businesses.
  • It recently found a buyer for its logistics businesses.
  • Barloworld still wants to offload its 50% stake in Avis.

As part of the restructuring of its business, Barloworld has found buyers for its logistics business. The only asset it still wants to sell is its stake in Avis.

The logistics division has been an underperformer in the group, recording a loss of R535 million for the year ended 30 September 2021.

Barloworld attributed the business' performance to the impact of Covid-19 on demand for logistics in South Africa, the unrest that took place in KwaZulu-Natal and Gauteng in July, as well as customer contracts that were not renewed.

In an interview after the release of Barloworld’s results on Monday, CEO Dominic Sewela said the division’s disposal to family-owned Bakers Transport in KwaZulu-Natal was underway. When the transaction concludes, Bakers will take ownership of Barloworld’s Manline Energy, Manline Freight and Timber 24 business.

The group is also disposing of its 51% stake in Aspen Logistic Services, which will be acquired by Aspen Business Trust.   

Barloworld is not disclosing how much the businesses are going for, only saying that the transactions fall below the thresholds for reporting. 

"The only thing now that’s left is to exit Avis, and our timing is that at the end of the year this time, we should be out of that business. And what it means is that I’ll be left with a portfolio of businesses that are very cash generative, with double-digit margins, [and] are robust in terms of cyclicality," Sewela said.

The 119-year-old company sold 50% of its in its vehicle dealership business to NMI Durban Motors for almost R1 billion, earlier this year. It is to sell the remaining 50% "at the opportune moment". 

The disposals and the acquisition of Tongaat Hulett’s starch business last year are part of the Barloworld’s strategy to become a company that is focused on industrial equipment and services, as well as consumer industries.

"I came on the job in 2017, and …  to pivot a company as old and as big as Barloworld, takes time in terms of our ability to get where we want to. 

"But I think over that period, we’ve distributed capital of close to R7.8 billion by way of share buybacks final dividends [and] special dividends," he said. 

Sewela added that Barloworld has also allocated close to R8.3 billion to acquisitions.

Although the group is on the lookout for more acquisitions to complement its core businesses, the CEO said it will be disciplined with regards to capital allocation. The priority in the short term, is to ensure the exits of the automotive and logistics businesses.

If something irresistibly good in terms of margins, cashflows and affordability comes up, Sewela said Barloworld might just snap it up.

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