Construction group Aveng announced recently that it agreed to sell a 51% of economic interest in Aveng-Grinaker LTA to Kutana Construction for an amount not higher than R756 million.
This scenario arose out of Aveng’s settlement agreement with the state in October 2016 after being found guilty of Anti-Competitive behaviour prior to the 2010 soccer world cup.
As we all know Aveng suffered a R7.3 billion fall in revenue in the last financial year. Our first question would be why are they selling these shares when business seems to be on a downward trend. The deal is subject to how Aveng performs over the next 3 financial years but nobody can guarantee market trends. It would be a tragic loss for Kautana if the markets don’t stabilise and the deal falls through and did the state agree a plan B in this instance.
We should also ask ourselves whether Aveng would have even considered such a transformational move had the legal settlement not required it to do so.
Anti-competitive behaviour literally rapes the states coffers in the interest of pure GREED and nothing else. Revenue stores that the countries poorest of poor contribute to in rates and taxes are merely exploited in the name of GREED
In a nutshell – a mutli billion rand listed company exploits state funding through anti competitive behaviour – is found guilty – to settle the matter they agrees to sell major shareholding to an emerging company in a market with downward trend where the deal has no guarantee of succeeding – you have to ask yourself sometimes…… is this the type of business deals we would like to see in the construction industry going forward?