GPI, Tellumat enter into joint manufacturing venture

The transaction is a merger of the engineering skills and manufacturing capabilities of Tellumat with the investment know-how of GPI. The newly created company aims to position itself as the manufacturer of choice for electronic and related technology products designated as requiring minimum levels of local content to be eligible for procurement by government departments and local infrastructure projects. The partners anticipate that the government's localisation initiative will create more local manufacturing opportunities and act as a catalyst for job creation.

Tellumat is a privately owned South African company founded in 1998 from businesses that originally were part of the UK-based Plessey group, which established operations in South Africa in the 1960s. Tellumat currently manufactures and assembles a wide range of electronic products, including some that are ultimately delivered to leading companies such as Boeing, Airbus and Eskom. By Tellumat adding its manufacturing capability, high level of quality systems and a wealth of manufacturing expertise in the aerospace, defence, energy, telecommunications, transport and consumer electronics industries to the joint venture, Grand Tellumat Manufacturing is well positioned as a localisation partner for foreign and local vendors bidding for government procurement and infrastructure projects.

The deal makes sense

Speaking about the deal, GPI's CEO, Alan Keet, said: "As a broad-based empowerment company GPI's focus is to invest in companies that will not only deliver good returns for our shareholders, but also create jobs. For us the deal makes sense as we have determined the capability of Tellumat during our investigations into the manufacturing of gaming machines and it became apparent that there is a much greater contribution we can make as a combined entity in the existing environment."

At the end of 2012, GPI entered into a deal with German slot machine manufacturer Merkur Gaming to manufacture gaming machines in South Africa for the first time. They formed a new arrangement by which they could manufacture, assemble and distribute slot machines, sports betting and lottery terminals through a joint venture with Tellumat as the contract manufacturer.

Tellumat's CEO, Andrew Connold, said: "We have a wealth of experience and skill in electronics and electronic engineering, and possess the capability to manufacture any electronic product locally. We offer a full turnkey solution that provides our customers with a complete product entirely produced, tested and packaged for onward sale at our premises. We can even build high-tech robotic products and systems, if that's what a customer wants."

Hassen Adams, executive chairman of GPI, is very bullish about the deal and said that Grand Tellumat Manufacturing shows encouraging growth potential and has a key role to play in the development of the engineering and electronics industry of South Africa. "We are excited about the long-term potential here and look forward to a prosperous relationship with Tellumat."

His sentiment is echoed by Connold: "The South African government's infrastructure build projects and localisation policies are a significant opportunity for Grand Tellumat Manufacturing. There is no need for South Africa to fully import or outsource the manufacture of high-tech electronic products to companies overseas. We have all the necessary skills to do this competitively, which not only provides convenience to our local customers, but will create much needed jobs and keep engineering skills in South Africa".