Treacle and Royal Bafokeng Finance acquire a 27,2% stake in Senwes Limited – December 2005Treacle are pleased to announce that we have, in consortium with RBF, acquired a 27,2% stake in Senwes for a total consideration of R122,7 million. Treacle had the first closing of its second private equity fund, Treacle Fund II, in March 2005. Treacle Fund II is a general private equity fund with investor commitments totaling R350 million. Over the past nine months, we have actively been evaluating investments that offer high growth prospects at good values and that have strong, balanced management teams. In the process we came across Senwes and together with RBF, managed to secure a sizeable stake in the company. Senwes was formed 94 years ago as Sentraalwes Co-operative servicing an area across the Free State, North West, Northern Cape and Gauteng provinces. Sentraalwes Co-operative was transformed into a public company, Senwes Limited, on 10 April 1997. Today Senwes is focused on providing input materials (such as seed, fertilizer and diesel), finance and equipment (such as tractors) required for maize production to farmers through its Trade division, and grain storage facilities (silos) and related grain marketing services to farmers through its Grain division. We consider the investment to be particularly attractive, as Senwes is currently significantly undervalued relative to its long term intrinsic value. The bulk of Senwes’ intrinsic value lies in the Grain division which owns approximately 25% of the South African market’s grain handling/storage facilities (silo complexes) at a book value of approximately R100 million, and a replacement value estimated at R2,5 billion. The area in which Senwes’ silos are based is the largest maize production area in South Africa. Senwes has a competitive advantage in this area due to the silo infrastructure as grain farmers in the Senwes area are captive customers of Senwes’ grain handling/storage facilities and transport costs prohibit them from considering alternative facilities in other areas. Although Senwes is a cyclical business, it has performed well during the past four years since the current management team under Johan Dique took over in 2001. The investment by the Treacle and RBF consortium provides Senwes with a significant long term Broad Based Black Economic Empowerment partner, who together with management will continue to unlock and create value for all stakeholders. We believe that the investment in Senwes will provide investors with an outstanding return on their money over the next 3 to 5 years. Kind regards Konrad Fleischhauer |
