Infrastructure, building and mining group Aveng, which has recently relocated its epicentre to Australia, says it is locked in discussions with potential partners about the future ownership of its local mining business, Moolmans.
This comes as the group flagged plans to split its business segments into two distinct and independent entities, McConnell Dowell and Aveng Limited — to make it easier for the companies to autonomously access suitable funding pools to meet their unique investment needs.
“The businesses are distinctly different, as are their capital needs and markets,” CEO Scott Cummins told Business Day. “From an operational and strategic point of view, it was hard to recognise where the synergies were and if you want to put companies together you really need those.”
McConnell Dowell makes up 78% of group revenue, with 13% attributed to built environs. These two segments will make up the newly established McConnell Dowell business, which was exploring a potential listing on the Australian Securities Exchange and the JSE, according to the group.
“Then of course you are still left with Aveng and Moolmans on the JSE,” said Cummins, outlining there were several ways transactions could take place with these.
The Moolmans mining business, which will be held inside Aveng Limited, will explore alternative ownership options and potentially introduce broad-based BEE capital.
The CEO said though the company had started conversations with possible buyers, there were options.
“There might be somebody interested in the Aveng JSE listing and there might be some interested in just Moolmans alone. So it could remain a listed group of companies, or it could fall into some other type of transactional arrangement,” Cummins said.
“It’s a little bit premature at this time to say exactly what it’s going to look like, other than we have begun some discussions with potential parties, and I’m sure now that we’ve announced our strategic review direction, there will be others who will be wanting to talk to us.”
Aveng has appointed advisers, including Macquarie Capital, to assist with the implementation process, which may see Aveng delisting from the JSE, while McConnell Dowell may list separately.
Cummins said while McConnell Dowell was most likely going to be separated from the Aveng JSE banner, it was fair to presume that with Moolmans alone — which makes up 9% of group revenue — Aveng would not have sufficient scale.
“But we’ve got to see what the other interested parties wish to do, whether they are thinking more in terms of private ownership or of using the listed platform to facilitate their strategic gains.”
Aveng reported a return to profitability and positive cash flow creation in the year to end-June as operating earnings rose to A$34.5m (R415m) from an A$86.8m loss. Headline earnings per share came in at A$29.6c from the prior year’s headline loss per share of A$61.6c, the group said.
The increase in operating earnings was driven by the infrastructure and building segments, with operating earnings of A$57.4m from a A$49m loss.
It said work in hand of A$3.1bn was down from the record high of A$4.2bn in June 2023, though it had come with higher embedded margins.
The reduced work in hand in the infrastructure segment reflected the timing of larger infrastructure project awards, particularly for government-funded projects.
After settling an A$23m term debt facility during the year, the group said its A$157.5m debt now comprised asset‑backed finance and lease liabilities associated with property, plant and equipment.
Group CFO Adrian Macartney said Aveng had strengthened its balance sheet through improved profitability, strong cash generation and the repayment of debt. He said it was negotiating a new $15m asset-backed finance facility.
“We are very close to concluding that, and it’s the sort of debt appropriate for a company of our nature,” said Macartney. “We have liquidity, but it is certainly appropriate to gear the balance sheet for equipment purposes.”
Aveng’s share prices close flat at R10 on Tuesday but is up 18% so far in 2024.
Update: August 20 2024
This story has been updated with new information.
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