In a written Parliamentary answer, Public Enterprises Minister Pravin Gordhan has stated that State-owned defence industrial group Denel, "is constantly exploring economically viable new revenue streams as part of its profitable growth strategy as well as new technologies to grow its business and technology base”. Denel is currently suffering from serious shortages of liquidity and requires recapitalisation to be kept going.

The Minister confirmed that the group was implementing a turnaround plan, which had been approved by the Denel board in February and which was “aligned with the expectations of the shareholder [the government]”. This involved the urgent disposal of noncore assets and entering into strategic equity partnerships for the different divisions of the group.

Regarding Denel’s recapitalisation, the government was still considering the amount that would be required. The group had applied for funding from the National Treasury’s contingency reserve. Further funding was sought during the medium term expenditure framework, he noted.

Gordhan assured that Denel’s diversification would be paid for through self-funding and research and development investments. “No specific additional State funding is foreseen for this technology expansion.”

The group is interested in “both technologies adjacent to its current product portfolio technologies and new ‘green fields’ technologies”, he reported. “Denel continues to and intends to further grow its collaboration with local and international universities and research institutes. Some of the technology and expansion areas being explored include security and cyber technology solutions, system of systems level integration capabilities, advanced software solutions and an enhanced offering to the South African Police Service.”

He pointed out that Denel was one of only a few companies – indeed, it might be the only one – in South Africa to have Level 5 military systems integration capability. (Gordhan’s answer was in response to a series of written questions posed by Democratic Alliance shadow Public Enterprises Minister Natasha Mazzone.)