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BUSINESS DESCRIPTION: Manufacturing of large domestic appliances
FUND: Ethos Fund III


Ethos enables Defy to entrench its dominance in the SA 'white goods' market.

The opportunity for Ethos Fund III, in partnership with management, to acquire 100% of Defy in 1997 arose as a result of a listed company unbundling its assets.  Defy management chose to partner with Ethos in the face of competition from a global trade buyer and a local financial buyer.

The Ethos investment strategy was to further build Defy’s local market dominance by selectively growing market share in its key “white goods” products, thus enabling a substantial increase in margins.

Defy management achieved this strategy by constantly updating and improving product quality, concentrating on “best value for money” products, improving manufacturing production efficiencies and developing an efficient sales distribution and services structure.

During the seven-year investment period, Defy increased its annual revenues by 123 percent, and its Ebitda by 388 percent.  Defy established itself as the dominant “white goods” brand in South Africa during this time, thus encouraging a number of financial and trade buyers to bid for Defy when Ethos chose to exit.  Defy was sold to a consortium consisting of management, the private equity division of Standard Bank, and women’s empowerment company Ayavuna.

Defy is one more example of how Ethos can partner with a strong management team to create value and an outstanding return for investors.