Ethos Buys Back Waco
After seven years, two international private equity firms, CCMP (formerly JP Morgan Partners) and the Asia-based Unitas Capital, have sold Waco to an SA consortium.
The consortium is led by Ethos Private Equity, and includes RMB Ventures, Standard Bank and Waco management. Waco is the rump of the old FSI group, which at one time owned the JD Group, a chain of shoe shops and a tyre manufacturer.
Ethos partner Stuart MacKenzie was involved in the buyout of Waco International in 2000, which Ethos also led. "We cleaned up the business a great deal until it was focused on its core business of scaffolding services, as well as relocatable modular buildings and portable toilets."
Waco International was bought in 2000 for R2,4bn and sold to the CCMP consortium five years later for R5,4bn. Today's price has not been disclosed but the portfolio of businesses is similar, the major exception being the Australian relocatable modular buildings business, Ausco Modular, sold last year.
The nominal head office of the business will move back from the Cayman Islands to SA, though the operational head office has remained in Sandton throughout.
MacKenzie says Kagiso Strategic Investments will retain its 25% holding in Waco Africa, which has four divisions - Form-Scaff, SGB-Cape, Sanitech and Abacus Space Solutions. He says Waco has made significant inroads in the rest of sub-Saharan Africa, which now accounts for 15% of revenue.
Waco group CEO Stephen Goodburn says the change of ownership brings the group strong shareholders who are prepared to support its growth agenda. It also gave management the chance to refresh their commitment to the business by taking additional equity.
"Over and above organic growth, Waco now has the ability to finance key targeted acquisitions," he says.
Though Waco operates in the cyclical mining and construction industries, it earns most of its revenues through equipment hiring, which provides a more predictable income stream than equipment sales.
Waco looks well placed to benefit from spending on power stations, mines, schools, offices and other projects in SA.
- Waco back in SA hands
- Ethos is main shareholder again
- Standard Bank is main debt provider