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Bidvest Divests Stake in Logistics Business to Akhona Strategic Investments Amid South African Economic Challenges

Published February 29, 2024
4 months ago

In a move signaling both strategic divestment and empowerment, Bidvest, one of South Africa's prominent conglomerates, has agreed to sell a substantial portion of its logistics operations to Akhona Strategic Investments, a black women-owned investment company. The 27.5% stake in Bidvest International Logistics (BIL) is being sold through Bidfreight, a wholly-owned subsidiary within the expansive Bidvest Group.

The deal, which marks a significant empowerment transaction, will be financed by African Bank and Greenpoint Capital, as per the statement by Nolunthando Gosa, the seasoned investment banker steering Akhona Strategic Investments. Lauding the investment opportunity, Gosa emphasizes its alignment with her firm's strategic vision to invest in foundational economic sectors and collaborate with capable management teams adept at navigating through the ebbs and flows of economic fluctuations.

The logistics sector is pivotal to the South African economy, facilitating the movement of goods across multiple industries. Bidvest International Logistics, a key player in this industry, has a commendable financial footprint with reported revenues exceeding 8 billion rand in the past year. Through a global partnership with EMO Trans Inc., BIL extends its operational reach to 120 countries, underscoring its importance to international trade networks.

South Africa's logistics domain is currently facing considerable operational hurdles. Plagued by persistent power outages and declining infrastructure quality, logistics companies are compelled to adapt to these disruptive elements. This backdrop contextualizes the importance of strengthening and investing in the sector. Gosa's reference to declining revenues in sectors reliant on logistics, such as mining, underscores the urgency to bolster this critical infrastructure.

The performance of state-owned companies like Transnet and Eskom directly influences the logistics and transport sectors; thus, advancements in these entities' efficiency are vital for an optimistic outlook. Bidvest, in its latest annual report, flagged energy concerns and infrastructure woes as key risks. The company's decision to divest a portion of its logistics operations can be seen as a strategic step to navigate these challenges while empowering local ownership through Akhona's involvement.

The transaction is reflective of broader trends in South Africa's logistics industry, with other significant players like Unitrans actively searching for investors to support their businesses against the same backdrop of economic and infrastructural predicaments.

By divesting a percentage of BIL, Bidvest is not only signaling its commitment to strengthening the logistics sector through strategic partnerships but also reinforcing the importance of diversifying ownership in the South African economy. This move has the potential to set a precedent for enterprise development and promote resilience in the face of ongoing economic challenges.

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