03 Nov 2021

Fibre cement manufacturer Everite acquired for over half a billion rand

LONDON, (The Southern African Times) – Mauritian investment entity Lonsa Group Limited (“Lonsa”), has acquired the majority and controlling shareholding in Everite, the leading industrial manufacturer of a range of building products for the commercial, industrial and residential markets, for some R600-million, in a massive vote of confidence in South Africa’s struggling construction sector.

The deal, which was effective May 1, 2021, includes Everite Group’s assets, businesses, and companies (including Sky Sands Pty Limited and Sheet-rite Pty Limited) as well as the purchase, from a third party of the freehold property from which Everite operates. It was partially debt-financed by Nedbank Limited.

Lonsa Everite, the special purpose vehicle incorporated to execute the acquisition – made up of Lonsa (55.49%), Everite Management Pty Limited (14.5%), Legacy Africa Capital Partners Pty Limited (25.01%) and Muvhango Netshitangani (5.0%) – emerged as the successful bidder following a highly competitive auction.

Everite, as one of the “crown jewels” of Group Five,  was put up for sale by the listed construction and engineering group as part of its business rescue process. Group Five  was placed in business rescue in March 2019 after experiencing financial problems due to, inter alia, its financial exposure in Africa and a lack of contracts. From a peak market value of R8.2-billion in 2007, Group Five was worth less than R100-million when its shares stopped trading.

Everite and its various related businesses and subsidiaries employ over 500 people.

Robin Vela, chairman of Lonsa, a principal investment entity investing in the energy, industrials, logistics and property sectors in Africa, says it acquired Everite because of its 80-year track record of profitability and cash generation as well as its significant tangible growth prospects into the rest  of Africa, which is currently underserved; its consistent growth amid challenging  economic conditions prior to and during COVID – EBITDA was in excess of R100-million per year for FY16 – FY19, increasing to R130-million plus in FY2021; and strong management team.

Other reasons included:

  • The significant barrier to entry created by the R2-billion cost of the facility Everite holds and the 10 year period it would take a competitor to get the premises in place, and permits (EIA, Water, Power, and Other) to compete;
  • Everite being the only large-scale fibre cement manufacturer in South Africa, and sub-Saharan Africa;
  • Everite being the market leader in the manufacture and distribution of several niche building  products; and
  • Everite being well positioned for growth in the green / alternative building technology and  Autoclaved Aerated Concrete market as a unique licensee of Hebel Autoclaved Aerated Concrete by the German Xella Group.

Says Vela: “Everite is a direct enabler of infrastructure and affordable housing development, and an indirect contributor to the creation of employment and alleviation of poverty in Africa. All of these are UN sustainable development goals which Lonsa seeks to contribute towards given Lonsa’s ethos of seeking (as a private investment entity) to be at the heartbeat of sustainable social-economic transformation whilst still earning a market-related return on its investments.”

Vela says Lonsa’s primary goal with the purchase is to increase the fibre cement production of Everite.

“Everite has some 50% excess production capacity on new idle plant that is yet to be installed. Working with management, Lonsa would like to see the expansion of the Everite brand into the African Continent, which to date only accounts for 10% of Everite’s sales. Lonsa would also like to more aggressively position Everite as an enabler and delivery agent for UN SDGs – infrastructure, housing, employment, poverty alleviation – and by so doing making it an attractive participant for the US$500-billion of capital committed to infrastructure in Africa by the G7 and leading economies,” says Vela.