For years, Grindrod SA has built its reputation on the provision of quality freight logistics services. Now, it is aiming to enhance its presence in the economic transformation arena, of course with the blessing of its shareholders.
With R10 billion kitty to spend on capital expansion projects over the next three years, Grindrod wants its BEE partners to be aligned at group level, rather than at the current operating level. To achieve this, it is planning to spend money on buying out its BEE shareholders – Calulo Investments for R360 million and Solethu Investments for R200 million. Calulo is invested in Grindrod SA, Unicorn Shipping, Unicorn Bunker Services and Sturrock Shipping among others, while Solethu is invested on the rail side in companies like Racec and RRL Grindrod Locomotives.
Once successful, the deal will see the companies as well as a third partner, the JSE-listed black investment firm Brimstone, reinvesting in the business at the holdings level. Subsequently, Grindrod will issue R1.6 billion of shares to the consortium, which will ultimately own 8.5% of Grindrod Ltd.
Justifying the deal,Grindrod CEO, Alan Olivier, explained: “Management time would be more effectively utilised doing what they should be doing – growing in Africa.” The current status where its BEE partners were in operating companies had proved to be a nightmare, characterised by multiple legal entities, layers of costs, conflicts of interest as well as business inefficiency, he elaborated.