SA’s Group Five increase stake in Mecsek to 10%

Group Five

South African construction firm Group Five is buying 10% stake in Hungarian road concession company Mecsek for 125.16 million rand  approximately USD9 million, seeking to source and participate in further global concessions.

Group Five is also selling its 49.99% stake in Mecsek’s motorway concession to Aberdeen Infrastructure Funds (AIF), a wholly owned subsidiary of Aberdeen Asset Management PLC, for 62.57 million rand approximately USD4 million.

Group Five and Aberdeen began a strategic equity partnership in December after buying a 49.99 % stake in Intertoll, which houses Group Five’s main European investment and concession assets, for 633.2 million. Group Five said the joint venture gives access to infrastructure investments in Europe, the United States and Australia. It said it will fund the acquisition using cash proceeds from the Intertoll transaction.

Mecsek is a road concession company in Hungary set up in 2007 to design, build, finance and operate the M6 phase 3, an 80 km (50 mile) motorway in southwest Hungary. Group Five and Aberdeen will jointly hold the additional 10% stake in Mecsek, split 50.01% and 49.99%.

In a separate statement, Group Five said it expects to report a headline loss of between 300 cents per share and 320 for the six months to December 2016, citing a 255 million rand settlement with the South African government.

Consequently, seven construction companies agreed in October to contribute a total of 1.5 billion rand over the next 12 years towards a fund to develop skills in the sector and give black workers a bigger role, after antitrust authorities imposed a penalty on the sector in 2013 for collusion in tendering processes. Results were also affected by continued weak trading conditions, contract losses and subdued tendering activity in the mining and oil and gas sectors, which has placed projects under continued pressure.