Brimstone, a South African based investment incorporated company with other Black Economic Empowerment (BEE) partners will buy into Grindrod, the South African based freight holdings company.
A share of between 8 and 8, 5 per cent is estimated to be worth 1.6 billion rand on the deal.
“We have three sectors of investment; healthcare, financial sector, fishing and now we have infrastructure partnering with Grindrod,” Mushtaq Brey, Director of Brimstone Investment Corp Limited told CNBC Africa.
The BEE partners include Solethu Investments Pty Ltd (Solethu) Calulo Investments Pty Ltd (Calulo),) and Calulo Newco Pty Ltd (Calulo Newco). This consortium was established as a BEE transaction with Grindrod.
(READ MORE:Brimstone reports drop in operating profit in the half year)
“The whole process involved investment bankers on Brimstone’s business pedigree.”
The deal is estimated to be worth four billion rand capital raising. Brimstone will contribute 500 million rand and the rest will be financed by vendors and other BEE partners.
“We will share eight percent with our BEE partners from Calulo and Solethu” explained Brey.
Brimstone decided to partner with Grindrod because of their presence in the African markets.
“Grindrod has been in existence in Africa for over a hundred years. The infrastructure sector which we are busy with at the moment is exceptional. Grindrod, in Mozambique is doing well with port and the rail,” Brey said.
Brey believes that the transaction allows Brimstone to be trading operations at a twenty percent discount. The company has opted for a long- term investment agreement as compared to short-term planning.
(READ MORE: Joint venture set to broaden African rail leasing trade)
“Brimstone are in it for the long term. Healthcare is valued at two billion rand, two billion rand in the fishing industry, infrastructure about 800 million rand. We are the financial BEE partner of Old Mutual, Nedbank and our short-term insurance combined are worth 800 million rand,” concluded Brey.
BY: THANDO MATUTU