South African transport services group The Logistics Group (TLG) has been bought by private equity investors for R1.6bn ($110m) in a move that could help inject much-needed investment into the country's creaking ports and rail network.
Container ships wait to load and offload goods in Cape Town, South Africa, April 17, 2020. REUTERS/Mike Hutchings/File Photo
South Africa, the continent's most developed economy, is struggling with a growth-crippling gridlock in railways and ports operated by state-owned Transnet National Ports Authority, forcing the government to consider partially liberalising the sector.
That, in turn, has piqued the interest of private investors.
TLG's new owners, African Infrastructure Investment Managers (AIIM) and the Mokobela-Shataki investment consortium, said they planned to invest in enhancing TLG's terminals in Cape Town, Port Elizabeth and Durban, in partnership with Transnet.
They also plan to prioritise ramping up businesses in Mozambique, Zambia and Namibia of TPG, set up in 2019 by fresh produce group Capespan to integrate a number of logistics assets. Both TLG and Capespan were owned by an agribusiness investment firm called Zeder.
"We view TLG as the cornerstone for a regional ports and logistics platform which will pursue additional investments along a number of transport corridors," said Ed Stumpf, investment director at AIIM.
Under the deal, infrastructure-focused private equity fund AIIM - part of Old Mutual Alternative Investments - has acquired a 74% stake in TLG, which offers port, rail, warehousing and digital transport logistics services across southern Africa.
The Mokobela-Shataki consortium took the remaining 26% stake in a deal completed on March 31, a statement said.
In another recent investment in the sector, Dubai's DP World said last year it was paying up to $887 million to acquire South Africa's Imperial Logistics.
Elsewhere Transnet last week invited bids from the private sector to operate sections of its freight network as it seeks to improve deteriorating infrastructure.
