Acquisition forms largest black-owned fuel pump and dispenser manufacturer

24th January 2003 By: vanessa vasques

The largest local black-owned manufacturer and repairer of fuel pumps and dispensers has been created with the acquisition by Kagiso Ventures of a 36,1% shareholding in Prowalco.

Prowalco manufactures, supplies and maintains nearly 60% of all fuel pumps and dispensers in South Africa’s petrol stations and is one of the biggest service providers to the petroleum sector, which has gone through a number of changes over the last few years.

In November 2000 the Charter for the Petroleum Liquid Fuels Industry was signed by the department of minerals and energy and industry participants, with the aim of placing 25% of the sectors assets under the control of black-owned business within the next ten years.

This arrangement, however, affected not only the oil companies themselves, but also a major participant and supplier like Prowalco, which then realised that in order to remain a preferred supplier in the industry it would have to promote empowerment – starting with its own ownership structure.

This is the word from the newly-appointed CEO of Prowalco, Mpumelelo Malumo, formerly national sales manager at Sasol Oil, who took up his new position at the beginning of November last year.

“The company realised that black economic empowerment was going to be a requirement in the future and started to look for suitable partners.

“We decided on Kagiso, primarily because of its credentials and I think this is the ultimate empowerment venture,” he adds.

Kagiso’s credentials include being a subsidiary of Kagiso Trust Investments, which has Kagiso Trust as its shareholder.

Kagiso Trust is a charitable organisation which donates funding to previously disadvantaged communities and has already spent more than R1-billion on upliftment projects and tertiary education bursaries.

The company acquired its 36,1% shareholding of Prowalco from RMB Corvest, reducing Corvest’s shareholding to 25%, with the remaining shareholders made up by management and an employee share trust created a few years ago.

“We have presented our new status to the oil companies in the industry and they are very pleased with what has happened here,” Malumo notes.

It is not easy sailing for the company, however, regardless of the fact that it now complies with the petroleum charter, as there is always more work to be done.

Malumo says the company is now concentrating on two specific growth areas.

The first is to expand the range of services it offers and the other is to expand its geographical reach.

In 2001 the company began offering a new service to the industry by offering full site maintenance of petrol stations around the country.

This includes not only servicing the fuel pumps, but all elements of the petrol station such as paving, signage, building maintenance and infrastructure up-keep.

The geographical expansion of the company is one of Malumo’s personal goals for the company as new CEO, and he says that due to the limited growth prospects of the oil industry locally, it is important to look beyond South Africa for further growth.

Prowalco already exports products and services to countries within the Southern African Customs Union, which is made up of South Africa, Botswana, Lesotho, Namibia and Swaziland, but Malumo says he would like to see its reach further into Southern Africa.

Malumo brings almost 20 years experience in the petroleum industry to Prowalco.

Armed with a Bachelor of Agricultural Sciences degree from the University of Zambia, he joined Shell Chemicals Zambia in January 1983.

He remained with Shell for 12 years, rising to the position of trading manager in Shell South Africa’s Chemical Division. During this period, he obtained a Master of Philosophy (plant breeding) degree from the University of Cambridge, England.

He is currently awaiting the results of his final year studies towards a MBA degree from the University of the Witwatersrand.

Malumo joined Sasol Oil in 1995 as trading manager in the company’s Refined Products division before taking on other roles, including marketing manager for motor fuels; marketing manager for Africa; and then national sales manager.

“Prowalco’s management and shareholders are delighted that a person of Mpumelelo’s proven experience in the petroleum industry has taken up the challenge of leading the company into the future,” non-executive chairperson (and former MD) Mike de Beer concludes.