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Ethos Equity sells its Tsebo stake to Absa

Business Day - Regis Nyamakanga

28 January 2008

ETHOS Private Equity had sold its entire stake in black-owned hospitality and facilities management firm Tsebo Outsourcing Group to a consortium led by Absa Capital for an undisclosed amount, Tsebo CEO Clive Smith said on Friday. Smith said Absa Capital, a unit of banking group Absa, had acquired 49,95% of Tsebo, which boasts an annual turnover of more than R2bn, while management of Tsebo had increased its stake to 20%. Black-owned companies Nozala Investments and Lereko Investments had each acquired 15% in the company.

Vantage Risk Capital said it had contributed R200m in mezzanine financing towards the acquisition of the company. Absa Capital’s head of equity investments, André Pieterse, said Tsebo had shown “strong growth and cash generation in recent years and we believe that this will continue”. Smith said Tsebo’s “track record” was testimony that empowerment linked with private equity deals worked. “Our partnership with Ethos Private Equity and Nozala Investments afforded us the space and flexibility to concentrate on developing new contracts and markets.” Tsebo is the largest player in SA’s catering and facilities sector and owns Fedics, Equality Food Services, Tsebo Cleaning Services, Tsebo Retail Services and the Drake & Scull businesses. It also operates in Botswana, Lesotho, Namibia, Swaziland, Democratic Republic of Congo, Mozambique and Nigeria.

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