Aveng sells pumps and valves business to black-owned Copaflo
Struggling construction group Aveng has sold its pumps and valves business, Aveng Dynamic Fluid Control (DFC), for R165m, the company said on Friday.
The group unveiled a strategy in 2018 that entailed the disposal of noncore assets. These include construction business Grinaker-LTA, Trident Steel and Aveng Manufacturing.
In February the company said it wanted to complete the disposal of most of the entities by the end of June 2019, when its financial year ends.
The group has identified engineering, construction and maintenance contractor McConnell Dowell and Moolmans, one of Africa’s largest surface mining contractors, as core businesses.
As at December 31 2018, the value of assets held for sale was R3.9bn. In the year ended June 30 2018, Aveng reported a R1.7bn loss. In the previous year, its net loss was R6.4bn.
Aveng, which completed the sale of Aveng Water in June, said on Friday it has entered into a binding agreement with Copaflo Fluid Control to sell Aveng DFC, a manufacturer and supplier of valves and pumps for the water, effluent and mineral processing industries.
The group said Copaflo is a 100% black-owned investment company with interests in engineering and manufacturing.
“Copaflo directly and indirectly owns 55% of the Fabchem Group. Fabchem Group owns Fabchem Mining, which is the second-largest supplier of cable anchors in Southern Africa,” Aveng said.
Aveng said Copaflo will receive funding from the Industrial Development Corporation (IDC). It said the deal is subject to Copaflo providing it with a guarantee from the IDC.
Aveng DFC, which is part of Aveng Manufacturing, has a presence in Australia, Brazil, Finland and the US. Aveng DFC was among the group of business units earmarked for sale as part of the company’s strategy.
It said proceeds of the sale will be used to “strengthen the financial position” and reduce debt. The group has previously highlighted liquidity and cash flow among its key focus areas.
At half-year results in February, Aveng reported noncore asset sales of R682m. In that period, Aveng DFC’s net profit was R10m.
The group said the transaction is expected to be finalised by October 31.
On Friday, shares in Aveng closed unchanged at 3c.