South African conglomerate Barloworld is in discussions with a group of investors regarding the acquisition of its African distribution business for Caterpillar equipment, reported Bloomberg.
The consortium includes Gulf Falcon Holding, a subsidiary of Saudi Arabia’s Zahid Group, and Entsha.
This acquisition would transfer Barloworld’s role as the official Caterpillar equipment distributor in Africa to the consortium.
The Saudi group, which has been a distributor of heavy machinery in the Middle East, began purchasing shares in Barloworld about four years ago. Zahid Tractor and Heavy Machinery, part of the Zahid Group, currently holds an 18.9% stake in the South African company.
Barloworld serves as the official Caterpillar dealer in several African nations including Zambia, the Democratic Republic of Congo, Malawi, Angola, and South Africa. The company also has operations in Russia, which have recently been scrutinised for potential export violations. If the acquisition talks conclude successfully, Barloworld may transition from a public to a private entity.
Middle Eastern companies are increasingly investing in Africa, competing for influence with countries such as China and France.
Acwa Power from Riyadh plans to invest $10bn (SR37.5bn) in South Africa’s renewable energy sector over the next ten years. Similarly, DP World, a logistics company based in Dubai, operates nine ports across the continent.
In May this year, Barloworld reported a resilient performance for the six months ending 31 March 2024, with revenues at R19.2bn ($1bn), down 8% year-on-year.
South African operations faced challenges including inflation, higher borrowing costs, and rail and port bottlenecks, impacting mining equipment sales.
Conversely, Barloworld Mongolia saw a 43% revenue growth, benefitting from favourable economic conditions in Eurasia.
Equipment Southern Africa and Ingrain revenues declined by 10% and 3%, respectively. CEO Dominic Sewela highlighted the group’s geographic diversification as a key strength, helping offset pressures from South Africa’s constrained macroeconomic environment and mining activity slowdown.
