Old Mutual’s R1.1 billion bet on better roads for South Africa

Old Mutual Private Equity (OMPE) and Sphere Investments (Sphere) announced that they have concluded an agreement with AECI Limited to acquire 100% of Much Asphalt alongside the Much Asphalt Management team.

The deal to acquire the Johannesburg Stock Exchange (JSE)-listed company is valued at R1.1 billion and will be financed through a combination of debt and equity.

Much Asphalt is the leading commercial manufacturer of asphalt and bituminous binders and emulsions in South Africa, primarily serving the road surfacing industry.

The company boasts a national footprint, being the only provider with a countrywide presence.

The transaction is expected to close during the first quarter of 2025, subject to customary regulatory approvals.

“We believe that an investment in the country’s road infrastructure, a key enabler of economic growth and job creation, aligns with the objectives of the Government of National Unity,” said OMPE and Sphere in a joint statement.

“This, combined with Much Asphalt’s strong competitive offering, means that the company is well-positioned to play a meaningful role in South Africa’s road infrastructure spend over the medium to long term,” the companies added.

This transaction marks the first and anchor investment in OMPE’s newly launched OMPE Fund VI. OMPE and Sphere will partner with the management team over the investment tenure.

They said that through stewardship, capital and perspective, “seek to generate transformative growth and business transformation in order to provide an attractive return to our investors and contribute meaningfully to the lives of the employees and communities within which we operate.”

Jacci Myburgh, Co-Head of OMPE said that “we have confidence in the infrastructure repair initiatives under the new South African Government and actively look to invest behind sectors that we think will recover to more normal levels over the medium to long term, compared to a volatile and abnormal last ten years for the South African economy.”

“An effective road network is critical to the exciting re-build that is underway in South Africa, which should stimulate economic growth and lead to the creation of new jobs.

“Much Asphalt is a clear market leader and we look forward to working alongside the management team to grow the business,” added Myburgh

Burchert Johannes, Investment Principal at OMPE, praised Much Asphalt’s management team, stating that “their experience, technical knowledge and commerciality has seen the company successfully navigate through several industry cycles and we look forward to partnering with them and Sphere to pursue the Company’s growth ambitions.”

Mohammed Sabi, Director at Sphere, emphasized the importance of road infrastructure for economic development.

“Our investment in Much Asphalt is a continuation of our 21-year track record of investing in high quality businesses which supply critical goods and services to their customers,” said Sabi.

Bennie Greyling, Managing Director of Much Asphalt, noted the company’s strong position to capitalise on increased road infrastructure spending. 

“We look forward to the next chapter in our business growth through the partnership with Old Mutual Private Equity and Sphere, two highly respected financial investors in the South African landscape,” said Greyling.

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