Pembani, Shanduka Agree to $744 Million Merger

By Alex MacDonald

LONDON--Shareholders in Pembani Group and Shanduka Group have signed an agreement to create a new 9 billion rand ($744 million) black-controlled company called Pan African Industrial holdings Group operating in the natural resources, infrastructure and industrial sectors, the companies said in a statement.

This follows announcements in May and November last year of the intention to create the so-called black economic empowerment firm following the planned exit of business tycoon Cyril Ramaphosa from Shankduka. Mr. Ramaphosa founded Shanduka in 2001 and built the company into a group with diverse investments, ranging from mines to fast food chains. However, he decided to exit his stake in Shanduka in order to a avoid conflict of interest after securing a post as South Africa's deputy president in May last year.

The newly merged group will have even more scale and liquidity to pursue investment opportunities. It will also be compliant with South Africa's black economic empowerment legislation, which aims to improve the socioeconomic standing of the country's majority black population by setting benchmarks for companies such as black ownership targets, skills training and development in poor communities.

The transaction is still subject to regulatory review but if completed the merger would create an investment vehicle with stakes in a diverse portfolio of assets including oil firm Engen, cement company AfriSam, natural resources firm Shanduka Resources, as well as financial services firms Standard Bank Group Ltd. (SBK.JO) and Liberty Group.

The group will be chaired by Phuthuma Nhleko, co-founder and chairman of Pembani and chairman of South Africa's telecommunications company MTN Group. Major shareholders would include Standard Bank Ltd. and Jadeite Ltd., a unit of state-owned China Investment Corporation.

Write to Alex MacDonald at [e-mail]