Jacobs Capital June LinkedIn Article

Choosing between listing on the JSE or remaining independently owned is multi-dimensional

With only 20 of the 370 listed companies in South Africa being headquartered in KZN, The Sunday Tribune Business Report recently released an article which discusses why KZN appears to perform in the shadows of Gauteng in terms of the number of JSE listed business entities.

Wessel Jacobs, CEO of Jacobs Capital – a Durban Head Quartered Private equity firm, and the company responsible for crafting the buyout of Masonite, the oldest listed company on the JSE, feels that the decision to list is always multi-dimensional, and that geographies play a lesser role in decision making.  Furthermore, he feels that consideration on whether to investigate alternative funding mechanisms to ensure sustainable growth always needs to be carefully considered. He commented that while the JSE historically served as more of a measure of influence, that there are many other important factors which also need to be considered.

Wessel recommended that greater consideration needs to be given to each business’s long-term sustainable growth and individual funding requirements.  Current trends indicate that private equity investment or organic growth strategies are currently prevalent.

Jacobs Capital is an established Private Equity firm, that boasts a national footprint and a Head Office in Durban.

Click here to read the full Sunday Tribune Business Report article.

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Virtual Round Table – Bankruptcy & Restructuring Round Table 2017

Wessel Jacobs, Jacobs Capital Chief Executive Officer

Jacobs Capital is a private equity and business advisory firm with a proven track record and a reputation in business rescue and the effective implementation of turnaround strategies.

Our team is led by CEO, Wessel Jacobs, an expert in implementing turnaround strategies which result in increased output, reduced waste, raised efficiency and improved financial performance in both performing and under-performing companies around the world.

With his experience and track record within the restructuring space, Wessel was invited to impart his business expertise at a Virtual Round Table discussion focussing on bankruptcy and restructuring.

The Virtual Round Table is an initiative run by Corporate Live Wire that brings international business leaders together on a digital platform to discuss various business topics. Wessel joined other successful businessmen and women from around the world to share his unique views on bankruptcy and restructuring in a South African context.

Find his exclusive interview with The Virtual Round Table below.
Click here to read the full Virtual Round Table discussion.

Q) Can You Outline The Current Bankruptcy And Restructuring Landscape In Your Jurisdiction?

A) The South African economy has been in a low-growth trajectory for several years, with two successive quarters of negative growth at the end of 2016 and the beginning of 2017 which placed the country in a technical recession. A widespread drought, weak international commodity prices, political uncertainty, credit rating downgrades, high levels of unemployment and labour unrest, and weak consumer spending all contributed to the country’s financial woes.

Since then South Africa has emerged from recession with 1% year-on-year growth, but business confidence is still at record lows. Many businesses struggle to grow revenues and profits. This has created constraints in working capital and cashflow, putting pressure on financial commitments to banks and trade creditors.

Under these conditions, the threat of business insolvencies is high. Business restructuring is therefore likely to face a growing demand.

Q) Have There Been Any Recent Regulatory Changes Or Interesting Developments?

A) There are many reasons why businesses fail, but in many cases a business is only experiencing a temporary setback. A business rescue programme and some breathing space could lead to recovery. It is easier to rescue a business than to create a new one, and allowing businesses to survive helps create a strong economy.

The introduction of business rescue proceedings in terms of Chapter 6 of the Companies Act No 71 of 2008 was therefore welcomed. It provided an alternative to the traditional insolvency proceedings by introducing measures to facilitate the re-organisation and restructuring of struggling businesses. It allows a business to survive as a solvent entity, or at the very least result in better returns for creditors or shareholders than they would receive in liquidation proceedings.

Unfortunately the legislation is badly drafted and extremely vague. The process is also not effectively or efficiently regulated. We are forced to rely on interpretations provided by case law, which is not always consistent. Another problem in case law is that specific facts and circumstances in our projects do not fit squarely into the facts of the judgment that we have to rely on.

We have also witnessed abuse and mismanagement of the business rescue process which has resulted in businesses closing their doors when they in fact had the potential to survive.
But despite the many regulatory, drafting and interpretation glitches in the legislature, it is a step in the right direction.

Q) What Is The Process For Asset Recovery In Your Jurisdiction?

A) There are a number of options available to recover assets from an entity. In our experience the most effective is to ensure that proper security is obtained through the registration of a combined special and general notarial bond. A special notarial bond lists specific moveable assets, with identifiable features such as serial numbers. A general bond refers to any remaining moveables in the business and the operation of the business, including any goodwill, intellectual property, machinery, fixtures, vehicles, cash and access to bank accounts, as well as servers. The bond is registered in the deeds office.

In the event of a default, an attorney can bring an application to court to perfect a bond within a few days. An interim order is issued that authorises the sheriff of the court to take into possession the moveable assets listed, as well as all raw materials, shares, goodwill, licenses and loan accounts, and to operate the business in order to maintain goodwill. Within a relatively short time, the matter is finalised in court with a return date where the debtor is given a chance to object to the order obtained. If there is no objection, the order is made final. Usually by this stage the matter has been settled.

Practically, this is most effective manner of recovery because the original court order is obtained on an urgent basis without notice to the debtor. This means that directors or shareholders of the debtor do not have the chance to move or hide any assets. It also means that the sheriff arrives at the business premises of the debtor unexpectedly and takes over his business, potentially ejecting the directors from the premises if necessary. The sheriff can sell goods, place orders, dispatch goods and run the business until the matter is in court again. Depriving a director of control of his business is usually an effective way to convince a debtor to settle and allow you to recover the asset, whether that asset is in the form of a loan or moveable property.

This is an extreme and aggressive remedy, so although it is very effective, it should be used with caution, and only in default of large asset recoveries.

Q) Which Sectors Are At Highest Risk Of Bankruptcy In The Current Business Landscape?

A) Sectors such as manufacturing and mining face the highest risk in our current economic landscape because they rely on resources such as labour and energy. The lack of available skills, shortage of training opportunities and strained employer/employee relationships contribute greatly to this risk. In addition, the South African market – being small – has much lower volume demands. This makes it difficult for these sectors to be globally competitive when faced with high-volume automated competition. The continued shortage of energy, and the steep increase in energy costs, collectively extend this cost curve in South Africa and prevent competitive output. These factors further lead to a lack of investor confidence in these sectors which then affects other investor confidence in the design, automation and skills development sectors.

Q) Have There Been Any Recent Notable Bankruptcies Or Restructurings? Are There Any Lessons To Be Learned From These Case Studies?

A) The restructuring of Masonite Africa Limited to Evowood Pty (Ltd) is the most notable turnaround achieved by Jacobs Capital Pty (Ltd).

Masonite Africa Limited was a listed entity that was acquired by Jacobs Capital and Blackbird Capital after being placed in business rescue. As a first step, the forestry assets were sold and the proceeds used to inject much-needed capital into the hardboard producing mill in Estcourt in Kwa Zulu Natal.

The name was changed to Evowood Pty (Ltd) to create a new business with a new business strategy and focus.

But despite more than R100 million investment in the first six months, the restructuring was dealt a serious blow when organised labour – representing around 450 of the 700 employees – reneged on an agreement and embarked on an illegal strike for several weeks. This effectively brought the business to its knees. Shareholders decided to liquidate the business as losses seemed beyond recovery.

However, an executive management team led by CEO Louis Marais, with members of the Jacobs Capital turnaround team, agreed to test a new downsized model. This plan was supported by shareholders, on condition of some challenging risk-mitigating constraints.

The outcomes have been very positive. Over the past few months the production and sales targets continue to be met and exceeded. The business operates at break-even and has recently even become profitable.

About 70% of the model has been effectively implemented to date. Around 400 people have been re-employed by the company and a potential disastrous blow to the town and community of Estcourt has been avoided.

The business continues to grow from this base. More people are being employed, while shareholders and investors are already raising capital to increase capacity.

An aggressive marketing plan has educated consumers on the benefits of hardboard over substitute products and greatly increased demand.

A primary lesson learned during this process was clearly to define the model, and then create a plan to implement this business model. A clear and transparent communication strategy should run concurrently with this implementation plan to ensure the support of all stakeholders. It is vital to have the desire and confidence to succeed in the face of severe obstacles. The implementation team requires trust and support to use their respective skills, despite setbacks which at times might seem disastrous. An important aspect was to stay focused on the goal and not be distracted by challenges.


Jacobs Capital & Vulindlela Holdings Invest in Summit Crane Hire

(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:


Masonite - Siyabonga Mncube, Wessel Jacobs, Nkosinathi Nhlangulela & Hilton Loring

Jacobs Capital investment breathes new life into Masonite and restores confidence

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 for more information about the company.

Leon Raubenheimer & Wessel Jacobs

Jacobs Capital buys South Africa’s leading industrial workwear manufacturer

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’sTM 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 and to find out more about MB Workwear, log onto

Gelvenor Chief Executive, Dicky Coetzee, Jacobs Capital director Leon Raubenheimer & Jacobs Capital CEO Wessel Jacobs (med res)

Gelvenor Textiles sold to South African investor

Gelvenor Chief Executive, Dicky Coetzee, with Leon Raubenheimer (Jacobs Capital director) & Wessel Jacobs (Jacobs Capital CEO)

South African private equity firm, Jacobs Capital, has acquired Gelvenor Textiles, manufacturer of industrial, technical apparel, outdoor lifestyle, protective and aeronautical fabrics from Courthiel Holdings, which is owned by German corporate investor, Claas Daun, for an undisclosed amount.

The transaction, which is effective from January this year, includes a merger with South Coast based MB Workwear, one of South Africa’s leading manufacturers of workwear and personal protective clothing.  MB Workwear will become a division of Gelvenor Consolidated Fabrics.

“This means that Gelvenor is now a 100 percent South African company for the first time in our long and successful history,” said Gelvenor Chief Executive, Dicky Coetzee.

Gelvenor was established in 1965 as a weaver, dyer and finisher of synthetic and manmade continuous filament yarn fabrics. The Hammarsdale operation has grown into one of the biggest success stories in the South African textile sector and is regarded as a global leader in the production of aeronautical fabrics, ballistics textiles, fire resistant fabrics and many other specialised products.

Gelvenor’s range of aeronautical textiles is the result of 30 years of research. It has been used worldwide for over 25 years in the production of paragliding, skydiving, hot air ballooning and military canopies. Gelvenor developed the first microfiber low bulk parachute fabrics in the world in 2002. These are now standard products sold to leading parachute manufacturers and have not been copied.
In 2007/8, Gelvenor supplied more than R100 million worth of ballistic fabric for vehicle armouring for coalition forces in Iraq and Afghanistan.

Wessel Jacobs, chief executive of Jacobs Capital, explained that, even though the two companies operated under the same parent company, they would continue to operate separately in the market as independent entities.

Coetzee said this was important as Gelvenor had concluded important supply agreements with key customers within the workwear market and needed to ensure that there would be no conflict of interests.

Jacobs added that the new ownership would not result in any material changes in agreements with Gelvenor’s suppliers. Most importantly, the company’s sustained growth meant there was no need for any staff changes. Instead, the emphasis would be on further innovation and research as part of a drive to position Gelvenor as a global leader in the production of specialist fabrics.  In the longer term, this could see the company expand and create further job opportunities.
Gelvenor has capacity to produce 18 million square metres of fabric per year. 25 percent of Gelvenor’s output is contract fabrics, 30 percent is industrial fabrics, 25 percent is specialty high tech fabrics, 15 percent is apparel fabrics and the remaining five percent, commodity fabrics.

Gelvenor exports at least 30 percent of output directly. 30 percent of its local sales go towards indirect exports in the form of ballistics products, bomb suits, parachutes and uniforms. Key export markets are Russia, America, Europe and the United Kingdom.
“Gelvenor celebrated 50 years in business during 2015. The philosophy that drove us for the first 50 years was to step out into the unknown, tackle those niche and speciality markets and go where others were too scared to tread. Now we have new ownership that will bring additional vitality and new energy to the business. This is very exciting for us,” Coetzee said.

He added that the sale was very positive for Gelvenor as Jacobs Capital supported its sustainable business model and its strategy of continuing to place Gelvenor at the forefront of speciality and technical textiles.
He said that plans were in place to grow production of aeronautical textiles by at least 30 percent in the next year through the production of extremely light and thin fabrics for rescue parachutes as well as capturing additional market share in the paragliding market.
“Jacobs Capital has a team of strong business leaders who will invest in and assist us to build on Gelvenor’s strengths. Their target is to grow the business and to provide support for Gelvenor to tackle even bigger projects than what we have done in the past,” he concluded.
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