Black economic empowerment (BEE) group Izingwe Capital, which has investments in mining beneficiation, financial services and power and engineering will acquire a 25% stake in Peters Papers, the merchant division of listed packaging group Nampak.
Nampak on Wednesday announced that it had sold Peters Papers in a transaction valued at around R220-million to a consortium comprising Actis Africa Fund 2 LP, a private equity fund, and Izingwe Capital.
Actis will have a 60% stake of Peters Papers while Izingwe will get 25% and 15% will go to management.
The transaction is subject to certain conditions and the anticipated effective date is 1 March.
The transaction has been concluded in partnership with the management of Peters Papers and Izingwe Capital led by Sipho Pityana, the former director general of the Department of Labour and Foreign Affairs.
Nampak said that the transaction positions Peters Paper as the leading empowered company in its sector.
According to Izingwe Capital financial director Tsakani Matshazi, the group will fund the 25% of the overall deal through equity and debt.
Managing director of Actis Africa Fund 2 LP Peter Schmid said: “There has been significant private equity activity in the paper and pulp industry worldwide and we believe the South African marketplace is ripe for similar investments. This transaction is an ideal example of the type of deal we like to do.”
Schmid added that the transaction reflects his group’s model in which value creation is based on cash flow and both management and the BEE partners have meaningful stake in the business.
“It is an example of solid and genuine empowerment with commitment from all parties,” he said.
Matshazi pointed out that this transaction demonstrates Izingwe’s focus in solid companies with strong management.
“We have developed a strong relationship with Actis and are delighted to be able to participate in this transaction. We have specific capacity and expertise, which allows us to actively contribute to the business.”
She added that Izingwe would be very active in securing business and implementing internal transformation.
Izingwe Capital will also target business throughout Africa, which presents significant opportunities for growth, according to Matshazi.
Nampak said that the sale is consistent with its strategy of focusing on core packaging business and its stated intention of seeking opportunities for meaningful BEE.
“I am delighted that we are able to conclude the transaction and to have assisted in the introduction of a strong empowerment partner to the business,” Nampak Africa managing director Neil Cumming said.
Cumming said that he is confident that the new arrangement will enable management to grow and develop their company.
Peters Papers, which has been in business for approximately 100 years, distributes paper and associated products to commercial printers and resellers in South Africa.
It represents more than 40 leading paper mills and graphic sundries suppliers from around the world and employs 200 permanent and 100 contract staff in its nationwide sales and distribution network in South Africa. – I-Net Bridge