South Africa port and rail group is out to conquer the Continent

February 27, 2018: South Africa’s national port and freight-rail operator is hunting for deals across the continent, from Senegal to Zimbabwe.Transnet SOC Ltd. has drawn up a list of 18 African nations where it wants to do business and is targeting at least five transactions this year, said Petrus Fusi, general manager for cross-border strategy. The state-owned company is also looking for opportunities in the Middle East, India and South Asia and wants to boost revenue by more than half to 100 billion rand ($8.6 billion), group executive for strategy Khaya Ngema said in the same interview. 

According to a news report published by the news agency Bloomberg, Transnet is seeking to expand outside its struggling home economy as well as diversify beyond its traditional business of bulk commodities. The company, which already operates in other African countries including Mozambique and Botswana, set aside 20 billion rand for acquisitions and could get as much as 25 percent of its revenue from outside South Africa within six years, chief executive officer Siyabonga Gama said in 2016. 

“We want to move the company from a 60 billion rand company to a 100 billion rand company in the next three to four years,” Ngema said in Bulawayo, Zimbabwe’s second-largest city.  

The company has several deals already in the works, including the purchases of stakes in a car terminal and multipurpose terminal at the port of Maputo, in Mozambique, which has been approved by its board and awaits ministerial approval, Fusi said.  

In Zimbabwe, the company and a South African-based consortium of Zimbabwean investors residing abroad won a contract to recapitalise the struggling National Railways of Zimbabwe. The idea is that the partnership develops into a long-term joint venture between Transnet and NRZ, Fusi said. 

Growth Ambitions
Transnet is seeking deals elsewhere in Africa as well as the Middle East, Asia

Other potential African projects include: 
In Zambia, Transnet signed a memorandum of understanding to lease rolling stock to Zambia Railways and aims to have the transaction concluded by July. In Kenya, the company will seek to operate the first three berths at the port of Lamu, which is being built by a Chinese company. 

In Benin, Transnet is in talks about a long-term relationship with the state terminal company and is in the process of appointing transaction advisers.

In Nigeria, the company is part of a larger consortium that includes General Electric Co. that is negotiating a 30-year concession to overhaul and operate about 3,500 kilometres (2,200 miles) of railway. 

Transnet has submitted expressions of interest for railway lines in Ghana. In Senegal, it’s looking at a project to rehabilitate a railway line from Dakar to a new iron-ore mine. 

Elsewhere in the world, the company has plans for a trip to Saudi Arabia within the next couple of months and is also looking in Oman, in addition to India and Indonesia.

“The Middle East presents huge opportunities for infrastructure development, in particular, rail,” said Fusi.

Source: Bloomberg