Austro preparing for African power play

Picture courtesy of

Picture courtesy of

Austro, the JSE-listed tool and machine distributor, is planning to go large in the energy sector in Sub-Sahara Africa and is getting its act together for the onslaught.

Last week it made public the appointment as non-executive director of Paul O’Flaherty, a man with an in-depth knowledge of power giant Eskom, and its former CFO.

Austro sells professional wood-cutting equipment, industrial diesel generators and industrial diesel engines. It also rents out diesel generators on short-term contracts. Other appointments announced last week include independent non-executive directors Mpho Makwana, Paul Baloyi and Nopasika Vuyelwa Lila.

Makwana is the current chairman of ArcelorMittal and director of Adcock Ingram, Sephaku Holdings and Nedbank. He was chairman of Eskom during 2010 and 2011 and a member of Eskom’s board of directors for almost nine years, the announcement said.

Baloyi is chairman of Talent Holdings and CAP Leverage and previously served as the chief executive officer of Development Bank of Southern Africa and DBSA Development Fund. These positions arm him with a wealth of knowledge about the municipal sector, especially from an infrastructure point of view. He is currently on the board of Bidvest Bank, Old Mutual South Africa Limited and Basil Read.

Lila is a registered chartered accountant and CFO of Eskom Pension Fund and is on the board of Basil Read and the Johannesburg Development Agency.

O’Flaherty, who will act as a “strategic advisor” and will play a key role in the execution of the company’s strategy, also served as deputy CEO of Group Five before his high profile job as CFO of Eskom. There he also oversaw the capital expansion programme.

He left Eskom in the middle of last year. Austro might have been flying under the radar so far, but it has never been a boring place.

It listed in 2007 during the incredible listings boom in the construction sector, as a company selling wood-cutting equipment. Shortly thereafter it acquired New Way, a company selling diesel generators.

The timing was impeccable and from 2008, when South Africa’s lights went out, it rained money. Revenue increased by 156% to R715m, only to drop to R580m at the end of the 2009 financial year and even further thereafter. Staff numbers were cut by 25% and there was a R10m impairment that was settled last year. At the end of 2012 the CEO of the wood business was fired after a disciplinary process.

“There were a lot of management and operational issues when we took over and lack of strategy and direction,” says Paul Mansour, who was appointed CEO in April last year.

In the previous financial year Austro’s revenue was R417m.

On the shareholder front Pregrine Equities recently increased its stake to just over 15%. A new vehicle, Ricophase acquired 27%. Quixley Global Incorporated holds 11%.

Ricophase is made up by David Brouze (50%), former chairman who led the initial listing; former Gold Reef Resorts executives Steven Joffe (35%); Christian Neuberger (5%); Jarrod Friedman (5%) who has also been appointed financial director; and Mansour (5%).

Monsour said last week the strategy is to grow Austro substantially in the industrial energy space in sub-Saharan Africa. Funding options are being considered and the company does not yet have the empowerment credentials it needs to do business with government. While an empowerment deal is not imminent, it is on the to-do list.




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