Taylor Maritime Investments Limited (TMI), a London-based specialist dry bulk shipping firm, has agreed to acquire a 22.6-percent stake in the South-Africa-based logistics company Grindrod Shipping Holdings Limited for $77.9 million (£58.9 million).
Grindrod Shipping is an international shipping company dual-listed on NASDAQ and the Johannesburg Stock Exchange. It owns a fleet of approximately 25 modern Japanese-built dry bulk vessels, with a market capitalization of $272 million.
Research by Billionaires Africa revealed that Remgro Limited is the largest shareholder in Grindrod. As of press time, the Rupert-led company owns about 23 percent of the company’s total shares outstanding.
Recall that in 2011, Grindrod sold 22-percent stake in the company, or 133.3 million shares, to Remgro for R2 billion ($260 million) in a bid to help fund its ambitious expansion plans.
The investment in Grindrod aligns with TMI’s strategy of seeking growth opportunities to boost shareholder returns, especially at a time when dry bulk market fundamentals remain strong.
With an average age of six years and above-average energy efficiency compared to its peers, Grindrod’s shipping fleet is highly complementary to TMI’s existing portfolio.
The acquisition is expected to close in early 2022 and no later than Feb. 28, 2022.
Including the 2.2-percent stake already acquired by TMI in the open market, TMI will own 24.8 percent of Grindrod’s shares when the deal is completed, opening up the possibility for TMI to assume the role of the largest institutional shareholder in the company.
On how it intends to fund the acquisition, TMI explained that the deal will be internally funded through the combination of short-term drawings on the company’s revolving credit facility, cash on the balance sheet and the sale of two Chinese-built vessels for a combined $42.8 million.
Commenting on the development, TMI CEO Edward Buttery said: “We believe the investment in Grindrod Shipping is an excellent opportunity where we know and respect the company which has a high-quality, young and complementary fleet. The acquisition will be internally funded by asset sales at premium valuations, cash on the balance sheet, and prudent, short-term use of the Company’s revolving credit facility.”
He added that: “Grindrod Shipping is a highly cash generative business and our investment is expected to be accretive from both a capital and income perspective with no impact on our dividend policy, our potential to pay an extraordinary dividend nor on our ungeared long term capital structure.”