Energy-focused small cap Mahube Infrastructure, which has been riding the wave of renewable energy demand, says it is considering expanding its footprint outside SA.
The JSE-listed group’s failure to secure broad-based BEE (BBBEE) credentials had excluded it from several opportunities, it said in its latest integrated report. It plans to transform its status, which would be linked to key performance indicators for executives for the 2025 financial year.
The company plans to transform its BBBEE compliance status, which would be linked to executives’ key performance indicators (KPIs) for the 2025 financial year.
CEO Gontse Moseneke said that while Mahube remained an important role player in infrastructure in SA, its required level of growth could be achieved only by entering into new opportunities, expanding its footprint and executing its new board-approved strategy.
“We will also be evaluating the possibility of progressively diversifying beyond SA with the assistance of our partners,” Moseneke said in the report published in early June.
“We will primarily be looking into the neighbouring countries that have relied on Eskom to export electricity to them and are now seeking independent power producers to supply electricity to them within the borders of their countries.”
Independent non-executive chair Martin Kuscus said Mahube had been benefiting from the drive towards renewable energy as the world looks to curb carbon emissions and battle global warming. Kuscus said that although the company saw this momentum as an opportunity, it would also look to diversify its service offering and not limit itself to energy infrastructure.
The group owns infrastructure assets in the energy, transport, and water and sanitation sectors across Southern Africa and is looking to expand its offerings and services.
“This will be done by exploring other areas of infrastructure development,” said Kuscus. “This would enable us to create an environment that allows us to accelerate growth and value creation,” he said adding that this would allow the group to truly diversify and become a fully fledged infrastructure player.
The company flagged growth prospects in the transmission infrastructure and downstream distribution space, saying it was now searching for opportunities in those two areas.
Additionally, it said there were possibilities in the water space both for potable water and wastewater infrastructure as the market comes to grips with the type of investments required in this sector.
“We are now working closely with technical partners and development finance institutions that are meant to support municipalities to see where and how we can find a project that unlocks investment and activity in this sector,” Mahube said.
However, as it looks to capitalise on mushrooming growth opportunities, the company is bogged down by its BBBEE non-compliance status.
“Currently Mahube has a noncompliance status, which could limit our successful participation in future opportunities,” the group said. It flagged that a noncompliance status could also lead to reputational damage.
“Unfortunately, the company’s BBBEE credentials exclude us from a number of opportunities that come across our desk,” said Moseneke. “The balance between investment into BBBEE initiatives to improve our credentials against returns to shareholders remains challenging”.
While compliance is not a legislative requirement, it is seen as a business requirement. Having valid credentials means a business can do business with organs of state, state-owned entities and municipalities.
This is especially true for contractors and built environment companies that bid for tenders. They need to have a BBBEE certificate to earn points on the government’s preference points system that awards work to those with the highest points.
In a bid to improve its credentials, Mahube said it would perform a gap analysis while the transformation of its BBBEE compliance status would be closely monitored and linked to executive KPIs for the 2025 financial year.
“BBBEE transformation is essential for the growth of our business in the infrastructure space,” the company said.
Part of the Johannesburg-based company’s new strategy involves attracting new capital into the business and spreading its investor base.
Mahube shares are tightly held, with the three largest shareholders holding more than 80% of the shares in issue, which leads to thin liquidity. Increasing the company’s equity share capital and introducing new institutional investors are among the key focuses going forward.
Mahube's share price was little moved at R4.85 on Wednesday.
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