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GNDE - Grindrod sets aside R4bn to acquire ships, logisti

28/07/2005 10:00:17

Grindrod sets aside R4bn to acquire ships, logistics groups
Nicola Jenvey

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KwaZulu-Natal Correspondent

DURBAN ù Shipping and logistics group Grindrod would invest about R4bn in new ships and acquisition of land-based logistics businesses in the three years to 2007, MD Ivan Clark said yesterday.

This is nearly a R1bn more than the amount that Clark had said the group was expecting to spend when he unveiled the 2004 financial figures in February. The investment is expected to double GrindrodÆs size to R6bn and be a forerunner to establishing a listing on the London Stock Exchange.

In the past six months, the group has undertaken an aggressive acquisition trail, spending about R500m on acquiring investments in land-based logistics companies around the world and paying a portion of the R2,5bn investment into new ships.

Clark said in the three years to December 2007, Grindrod would generate about R2bn from cash flow and profits, R750m from the issue of new preference shares and have a capacity for gearing that brought its potential investments to R4bn.

Yesterday, shareholders approved the preference-share scheme, giving management the green light to undertake a road show and promote the capital-raising venture. Investec has underwritten a portion of the preference offer and Clark said the investment would cater for a market sector seeking low-risk, tax-free dividends.

Grindrod would use the capital raised via the preference share issue to take advantage of current opportunities in the shipping and logistics market.

Clark pegged GrindrodÆs growth strategy on four tenets that have anchored the groupÆs acquisition trail in recent months. These included increased public private partnerships in the rail and ports; synergies between commodity trading and shipping; opportunities in logistics and the opportunities involved in shipping and ship owning.

Grindrod has acquired investments in marine fuels and lubricants business Cockett Marine Oil, international trader company Oreport, US-based Seaboard Corporation, Sheltam Locomotive & Rail Services, furniture transporter Boltt Removals, Uniroute Logistics and terminal operator African Portland Industrial Holdings.

In acquiring Seaboard Corporation commodity trading and shipping operations, Grindrod is set to achieve its goal of doubling turnover.


Clark said the group was investigating further partnerships within the logistics field, where partner companies or acquisitions would further the synergies within Grindrod.

On the shipping and ship-owning side, Grindrod had a low-cost fleet of owned and chartered vessels with a substantial number still to be delivered.

Clark said the current dip in international shipping markets opened a host of opportunities.

The groupÆs sound cash flows and the capital generated from the preference shares would enable Grindrod to grasp these opportunities.

Last week, Grindrod said it would achieve a 60%-75% boom in headline earnings in the six months to June, only weeks after it had signalled a 50%-60% hike on the 256,2c achieved last year.

The upward revision came as the rand weakened against the dollar and Grindrod experienced improved operating results for May and last month.

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