In 2005, RMB Corvest and Shalamuka Capital provided equity funding for the merger of two distributors of DonaldsonTM filters in the Highveld region. The combined distributorship was called Filter & Hose Solutions. The different sets of skills incumbent in both distributors were complementary which resulted in significant synergies and growth opportunities. The introduction of Shalamuka Capital, as the broad-based BEE shareholder, also assisted with the winning of new business contracts. In 2010, the shareholders disposed of the company to Hudaco Industries Limited in a deal worth R350 million, resulting in solid value creation for all shareholders.
In 1990, RMB Corvest funded the management buy-out of Fidelity Guards from Rennies Group in a transaction that saw the management team take control of the security guarding business. The shareholders then embarked on a strategy to build a multi-service guarding, cleaning, hygiene and cash-in-transit business and the business grew from strength to strength over the next 15 years, acquiring Elweirda, Supercare and Springbok Patrols along the way.
In 2005, in a bid to realise value for shareholders and introduce black economic empowerment, RMB Corvest facilitated the unbundling of the group and partly funded the exit of the original management team. The group was unbundled into guarding, cleaning and hygiene (Supercare) and cash in transit. Simultaneously, RMB Corvest funded the introduction of meaningful black empowerment into the businesses. The unbundling enabled the operational management teams in the different business units to acquire a shareholding and this direct financial interest drove significant shareholder growth thereafter.
In 2008, the Fidelity Cash-in-Transit business was sold to UK-based G4S and in 2011, Supercare Services Group was sold to the multinational cleaning business, Compass Group. Both transactions realised significant value for shareholders.
The Fidelity Security Group, now predominantly a guarding and security services business has continued to grow and during 2012, the original BEE investors needed liquidity and signaled an intention to realize their investment. The Group was re-geared, facilitating shareholder wealth creation, management increased their shareholding in the business and RMB Corvest co-funded the introduction of Shalamuka Capital and New Seasons Holdings as the primary BEE partners in a deal that saw the Fidelity Security Group retain its “black owned” status.
RMB Corvest does not have exit timing pressures and we continue to be a shareholder in Fidelity Security Group, thus illustrating our track record as a long term investor where it makes commercial and strategic sense.
In 2008, after many years of successfully building the business, the founders of Davita Trading (who were also the senior management team) made a decision to seek a medium term exit for themselves. RMB Corvest acquired a majority stake in the powdered beverage and food flavourants manufacturer in 2008 and assisted the founders in considering various options to achieve a full exit for themselves over the medium term. This entailed either developing a management succession plan and buy-in to ensure the long term sustainability of Davita Trading or finding an appropriate trade buyer who could introduce a new management team. Just 3 years later, in 2011, RMB Corvest and Management secured a deal with Tiger Brands to acquire 100% of Davita Trading for R1,6 billion, resulting in both significant value creation for the exiting shareholders as well as ensuring the long term sustainable future of a successful business.
In 2006, RMB Corvest and Safika Investments funded the buy-out of African Merchant Bank’s shareholding in Servest, in a transaction that saw the management team take control of the business. The transaction also maintained the BEE credentials of Servest. Since the initial investment, Servest has actively sought to supplement organic growth with acquisitive growth. It acquired two RMB Corvest portfolio investments, Industrial Health Services and Plants At Work, in addition to numerous other smaller investments. These acquisitions significantly enhanced Servest’s offering to its South African customer base.
Recognising an opportunity to take the Servest model offshore, the shareholders then decided to build a service portfolio through acquisitions in the UK. Thus, in 2007, Servest and RMB Corvest acquired a controlling interest in Ecocleen Holdings (subsequently rebranded as Servest), a cleaning business focused on the retail sector in the UK. Following this initial offshore investment, RMB Corvest has assisted Servest UK to acquire additional businesses in that market focusing on cleaning in the commercial and public sectors, as well as businesses providing security and catering services.
Growth and expansion capital is an important aspect of RMB Corvest’s funding strategy and we are comfortable to continue supporting a “build and grow” strategy for Servest, with further acquisitions in both South Africa and the UK currently being explored.
Ozz Limited, a heavy engineering firm focused on the mining and industrial sectors, used to be listed on the JSE. In 2003, RMB Corvest led a consortium to delist Ozz as part of a leveraged buy-out and run it as a private company called Ozz Industries. The Company comprised two distinct business units being Ozz Foundries and West Rand Engineering. In 2008, Scaw Metals, a division of Anglo American, acquired Ozz Industries with a view to boosting its own foundry business. West Rand Engineering was not included in the sale to Scaw Metals and RMB Corvest partnered Management and bought the West Rand Engineering business out of Ozz Industries in a management buy-out.
Our partnership with Management has been very successful and we continue to be an active investor in West Rand Engineering. In 2012 we re-leveraged the business and engineered a second-round management buy-out, thus facilitating liquidity for retiring management members and providing younger management with an opportunity to acquire a shareholding in the business. Simultaneously, we provided finance for the acquisition of a small complementary business into the West Rand Engineering fold.
A few years ago RMB Corvest recognised that the African continent offered investors significant growth potential, albeit at a higher risk compared to our traditional market being predominantly South Africa. As a result we spent a considerable amount of time travelling and ultimately unpacking the various commercial and legal risks associated with investing in Sub-Saharan Africa.
In early 2012, RMB Corvest concluded its first direct investment in Nigeria into a juice and tomato paste manufacturer called Vital Products Plc. Together with other South African investors we acquired a 26% equity interest while still ensuring that all existing management and shareholders remained in the business. All proceeds invested were used to build a new state of the art factory that will allow Vital to keep up with the fast growing consumer market segment in which it plays. Nigeria presents unique political and economic challenges, but the opportunities, especially within the consumer-goods manufacturing segment, are extensive and RMB Corvest is actively pursuing other, similar investments.