September 2016

(L-R) Clint Correia (Summit financial director), Nomfobe Ndzelani (Summit HR manager), Leonard Openshaw (Summit operations director), Michael Grant (Summit CEO) & Tyrone Bricknell (Jacobs Capital investment manager)

Private equity investors, Jacobs Capital and Vulindlela Holdings, have purchased a majority stake in leading mobile crane hire company, Summit, for an undisclosed sum.

The company, which is the market leader in the Western Cape and has a presence in the Eastern and Northern Cape, has substantial growth prospects nationally.

The inclusion of new private equity partners will enable it to realise a number of major growth opportunities in key areas such as the oil and gas sector and wind turbine electricity generation industry, explained Jacobs Capital chief executive, Wessel Jacobs.

Summit provides mobile cranes, trained operators and related vehicles and rigging services to clients as part of short to medium term contracts or one off projects. It is the dominant mobile crane provider in the Western Cape and is currently servicing clients in many different industries.

In terms of this transaction, the Vulindlela / Jacobs Capital consortium will hold a majority stake in the business with chief executive and company founder, Mike Grant, chief financial officer, Clint Correia, and chief operations officer, Leonard Opensaw, each owning a share in the company.

CEO Mike Grant, who launched the company to provide a one stop lifting and moving solution in mid-2010, said that he realised that there was a need to take on private equity partners to maintain Summit’s steep growth curve earlier this year and to involve partners with the right BEE credentials.

During its first four years in operation, Summit has had double digit growth in turnover year on year and with the new partners expects to carry on this growth. Last year, Summit Crane Hire invested over R50 million in growing its fleet, adding forklifts, trucks and mobile cranes. It has a staff of 100, including highly skilled rigging crews, project managers and health and safety officers.

Grant, who has turned down at least 10 offers to purchase the company, said that because the company was operating at full capacity and needed even more additional equipment, it had been forced to pass up a number of lucrative contracts.

He said Jacobs Capital and Vulindlela would add value to the existing dynamic team. With an improved BEE scorecard and financial backing, the company is now well positioned to work on large infrastructure projects in both the public and private sectors.

Jacobs Capital’s investment manager, Tyrone Bricknell, said that the investment in Summit Crane Hire was an exicting one. The business had a strong track record and the investment was supported by a strong and experienced management team that now included shareholder partners.

“The management shareholders are highly experienced and we see this as an opportunity to partner with them for the long term. We would like to use our investment in Summit Crane Hire as the foundation for further growth in this sector. We would like to grow the company either through acquisition of similar businesses or organically and we believe that it will be the market leader not just in the Cape but throughout the country in the near future,” he said.

The balance sheet has significant assets which are underpinned by strong earnings with sound growth projections for 2017 and beyond which was another important investment criteria.

Summit Crane Hire currently focuses on the oil and gas, mineral and logistical support, civil infrastructure, industrial and construction sectors. This diversity is a strength, because if there is a downturn in one sector, assets can be reassigned to others.

Jacobs said that the Summit Crane Hire investment was a valuable addition to the Jacobs Capital portfolio. With investments set to reach R2 billion shortly, it has been on an aggressive acquisition trail over the past year.

Summit Crane Hire marks the fourth major investment for Jacobs Capital over the past two years.

For more information about the companies:

www.summitcrane.co.za

www.jacobscapital.co.za

www.vulindlelaholdings.co.za

Siyabonga Mncube (Black Bird Capital), Wessel Jacobs (Jacobs Capital), Nkosinathi Nhlangulela (Black Bird Capital) & Hilton Loring (Masonite).

A recapitalization programme and an investment of over R300 million are on the cards for KZN-based Masonite, a major South African manufacturer of high quality engineered wood.

The business rescue process – which started last year and officially ended this week – included the acquisition of the company by corporate investment and transactional advisory firm Jacobs Capital and its partners, Black Bird Capital (headed by Nkosinathi Nhlangulela and Siyabonga Mncube).

Creditors received 100 cents in the rand and shareholders will be paid a 35 percent premium on the list price. Most importantly, all employment contracts were saved.

The board of directors is in the process of being reconstituted.

“We have wasted no time since the deal was approved by the Competition Commission in June. All the conditions of sale have been met. This is a very exciting time. We have teams in place looking at all aspects of the business and strategic planning sessions have produced short and longer term plans,” said Wessel Jacobs, chief executive of Jacobs Capital.

The addition of the Masonite business at Estcourt, KwaZulu-Natal, to the Jacobs Capital portfolio marks the third large investment by the group in 12 months, and it is expected to make a meaningful contribution to the annual revenue of the company, whose investments already exceeds R1,5 billion.

Since its establishment in 2002, Jacobs Capital has completed over 50 restructuring projects including the successful turnaround of Da Gama, one of the largest textile mills in South Africa.

Jacobs said Masonite is a strong company and the deal was structured to ensure that all creditors were paid out leaving the company with a debt free balance sheet and working capital of R85 million as well as R100 million in stock holding.

“Extensive recapitalisation of the production lines is necessary to ensure that the Mill runs at full capacity which will ensure that the company is able to return to sustainable profit as quickly as possible.  A new product line is also among plans to ensure that Masonite keeps up with market trends,” said Jacobs.

“We believe that the modernisation of the mill will prepare it for expansion into new markets and products. This will contribute towards Masonite business maintaining its position as a leading producer of hardboard and timber products,” he added.

Nkosinathi Nhlangulela, director and shareholder added: “The company is now 100 percent locally owned with a new board that understands local conditions and imperatives. We see this as a long term commitment to both the business and the KwaZulu-Natal region. The new Millco leadership team is well placed to ensure a sustainable, ‘built to last’ business approach. It combines local management experience and expertise and offers access to strategies, systems and methodologies that have proven successful in turning around a number of South African manufacturing businesses.”

An upbeat Hilton Loring, Masonite Chief Executive, said the company was back on track. “The lead management team is in place with renewed energy and entrepreneurial spirit. This combined with investment and a new product line will ensure the company meets growing demand and provides Masonite products of the same high quality and standards that customers expect.

Jacobs said he was confident that the oldest company listed on the Johannesburg Stock Exchange was poised to regain its place in the economy. “We have an excellent team that can restore this business and take it to new heights.”

In terms of the ratified transaction, the Millco Consortium has purchased the Masonite Mill. The Masonite forestry assets have been sold to Forestco which is owned by R&B Timbers and an agreement is in place that secures the supply of timber for Masonite.

The Estcourt Mill, in the KwaZulu-Natal Midlands, which produces hardboard, soft board and door panels, was damaged in an explosion in June 2014. This, together with a difficult trading environment, saw the company apply for business rescue in December last year.

Because Masonite has been in business rescue, its trading on the JSE has been suspended. Details of the listing on the Johannesburg Stock Exchange are still to be finalised.

Jacobs Capital was established in 2002 as a private investment company. Since then, it has developed from exclusively acquiring and establishing businesses, to incorporating independent divisions that provide an extensive range of business advisory services as well as manage turnarounds, mergers and acquisitions.

Its portfolio includes leading workwear manufacturer MB Workwear, textile companies Da Gama and Gelvenor, automotive component supplier Connecto Fasteners.

Unlike other potential private equity investors, Jacobs Capital is able to draw on extensive in-house expertise to implement a strategy that will see Masonite taken out of business rescue within a short period of time.

Visit www.jacobscapital.co.za for more information about the company.

Leon Raubenheimer (Former Managing Director of MB Workwear, currently Jacobs Capital Director) & Wessel Jacobs (Jacobs Capital CEO)

Durban based private investment company Jacobs Capital has just purchased the majority interest in Port Shepstone based MB Workwear, the market leader in industrial safety workwear in South Africa thereby localising the stake previously held by its Australian based shareholders.

Wessel Jacobs, chief executive of Jacobs Capital, said that the deal, which will soon become fully implemented once all approvals are in place, provided an important opportunity to invest in a company that had not only survived the drastic decline of South Africa’s clothing and textile sector since the nineties but had also grown its market share both locally and abroad.

Over the past three years, sales have grown by an average of 11 percent and MB Workwear is on a strong drive to not only increase sales and market share locally but also to establish and grow key niche markets in Africa, Europe and the Middle East.

“We see a lot of future value coming from the increased profile of safety across all segments of industry driven by legislation, the effects of the Local Procurement Act and the drive towards innovation within the company itself. As a South African shareholder that understands the local business climate, we believe that we can both create and cement strong and lasting relationships with our customers,” he said.

Both locally and abroad, the workwear market is an extremely competitive one that is often flooded with large quantities of low quality cheap garments due to the low barriers to entry. MB Workwear’s strength is its ability to service highly specialised niche markets in heavy industry.

“The MB Workwear team has successfully run a profitable business under difficult market conditions, showing that they have the trade knowledge and business acumen required to continue to see the business trade profitably into the future,” said Jacobs.

The company, which traces its history back over 50 years, was located at Marburg on the KZN South Coast to take advantage of incentive packages offered by the then Department of Trade and Industry to decentralised businesses.

MB Workwear, as it is known today, was formed in 2005 through the merger of Marburg Manufacturers which had been established in the 1960s and Beslin Workwear, which was set up during the 1980s. Today, it employs more than 950 people and utilises over 350 000m of fabric to produce in excess of 200 000 garments per month for customers across a wide spectrum of industries including mining, foundry, steel, oil, gas and petroleum and chemicals.

Director, Leon Raubenheimer, explained that MB Workwear specialises in protective work wear and is known for excellence and innovation, particularly when developing specialised fabrics and fabric treatments for garments. These include its exclusive ZeroFlame® range of fabrics developed specifically for protection against fire and molten metal drip or splash. The company is also internationally accredited to manufacture protective garments from Vinex fabric developed specifically for the aluminium industry and DuPont’s^TM Nomex® fabrics that offer inherently flame retardant properties.

He said the company was constantly working with suppliers and other partners on innovation relating to both the garment manufacturing process and the fabrics used. An example of a current project is a joint venture with Gelvenor Textiles to manufacture coveralls produced from a specialised fire retardant fabric for both local and international markets such as the Middle East.

“MB Workwear is able to produce protective clothing that is rated amongst the best not just in South Africa but across the globe. Our commitment to quality has helped us to form longstanding relationships in the gold, platinum, coal and diamond mining industries as well as with parastatals such as Eskom and leaders in OGP such as Sasol, Engen, Chevron, Shell, BP, Total and Mossgas” he said.

Other big names on the MB Workwear customer list include Illovo, Huletts, Engen, BHP Aluminium, Sapref, Columbus, Sappi and Scania. It also supplies products directly or via distributors into major retailers such as PEP, Pick ‘n Pay and Checkers.

MB Workwear offers brands that are SABS approved. The company boasts ISO 9001 certification and also holds accreditations in Canada and the European Union. As a result, growth in export sales revenues has averaged 10 percent over the past three years. Almost 10 percent of turnover comes from sales to Africa and Europe, nearly three times more than the industry average of 3,82 percent.

MB Workwear has been exporting for over 13 years. Established markets include Namibia, the UK, Norway, Zambia, Ghana, Mozambique, Angola and the United Arab Emirates.

Investment in automation and new plant has created capacity for growth. Raubenheimer expects to make inroads into the local market due to increasingly stringent safety regulations stipulated in the Occupational Health and Safety Act and the requirements for internationally recognised ISO certification.

When it comes to exports, he believes that the company’s quality, innovation and ability to specialise in specific sectors and niche markets will put it on a strong growth curve. The weakening of the rand is also likely to make MB Workwear a competitive player internationally.

Overall, he says the company’s good future prospects and renewed energy come on the back of a change in ownership and the implementation of strategic improvement projects to enhance the overall performance of the company both offshore and closer to home.

For more information about Jacobs Capital, visit www.jacobscapital.co.za and to find out more about MB Workwear, log onto www.mbworkwear.co.za.