The sale of the empowerment stake to Thebe replaces a 30% holding shared by Compass's previous black partners, Kagiso Trust and Khulani Investments. Both companies exercised an option to sell out that came due.
The deal with Thebe — born by African National Congress (ANC) members and chaired by former ANC finance head Vusi Khanyile — gives Compass a well-connected partner that will help the company open doors.
Taking into account Thebe's catering, event management and facilities management arms, about 60% of the company's business is private sector and 40% with government. “Clearly, contacts in our business will be leveraged ... very ethically,” Andy Furlong, Compass Group MD for Africa, Asia and the Middle East, said. “This should create very exciting opportunities for us to see some future growth in the food sector or other sectors in which we operate.”
Khanyile, however, said the deal was not a way for Compass to get government business.
“Let me help you to understand that,” he said. “Thebe's share of public sector business is well below that of other companies in SA — black and white. That could not have been the attraction (for Compass).”
Compass employs more than 6000 people in SA and has an annual turnover of R1,5bn.
It says it is the largest player in the country's R4bn contract catering industry.
Thebe sees the investment as a way to build catering services into many of its other activities and help it extend its presence further along the tourism and hospitality chain.
The group, for example, has management contracts for the Coca-Cola Dome in Johannesburg and the SANParks-owned tourist facilities at Cape Point. The Compass tie-up would allow Thebe to provide catering services there, said Monwabisi Fandeso, CEO of Thebe Tourism Group.
“This closes a gap in our portfolio,” Fandeso said. “Our conference and events business ... we have used other parties to provide catering,” Fandeso said.
What is now Compass Group SA dates back to 1986 when Khulani Holdings head Johnny Mhlungu — at one time formerly provincial MEC for finance and public works in KwaZulu-Natal, went into business with a company called Supervision Food Services. By 1994 it was renamed Kagiso Khulani Supervision Food Services — owned by Khulani, Kagiso, Tongaat-Hulett and First Corp, according to a Financial Mail report. In 1997, UK-listed Compass Group bought a 70% stake in Kagiso Khulani Supervision Food Services.
The relationship with Kagiso and Khulani, which have exited the business, remained strong, Furlong said. “We are parting on the best of professional terms.”
Theresa Griffiths, Kagiso's head of communications, repeated the sentiment on Tuesday. “It was always the intention to exit at some stage. It was something on the cards for some time.”
She declined to say how much Kagiso had made from the sale of its stake. Mhlungu, chairman of Compass Group SA, could not be reached for comment.
Source: Business Day
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