Nigeria’s infrastructure company (Infra-Co), which is expected to grow to N15trn ($37bn) in assets and capital in the next few years, will ... go a long way in helping to raise capital from private investors and transforming the power sector, says Kola Adesina, group managing director at Sahara Power Group, an energy and infrastructure company.
The Johannesburg-traded company is debt free and so has a “sizeable available war chest,” Gobalsamy says. The company is actively looking for acquisitions and partnerships, which are both possible means to achieve growth, he adds. “We are able to acquire and expand organically.”
The company supplies speciality fertilizers for agriculture and explosives for use by miners. Since taking over as CEO in September 2019, Gobalsamy has repaired a stretched balance sheet and reduced the number of operating countries from 40 to the current 25. The country exits are now complete, and Gobalsamy says he is looking to expand the country’s presence in its existing international markets, focusing on customers in mining and agriculture.
- “We would like to have a bigger presence in Australia,” where the company would be able to add value in the mining sector, Gobalsamy says. He would also like to make an acquisition in the agriculture business in east Africa.
- West Africa has the potential for mining business expansion, and the company also aims to grow both its mining and agriculture businesses in Zambia, he says.
Mining in South Africa is not a clear source of growth. The sector, the company said in November, suffers from “erratic provision of utilities, a lack of regulatory transparency and “lengthy processes to obtain mining permits and licences” leading to “a continuous decline in exploration spend and subdued foreign direct investment”.
- The company’s growth “will come from new markets,” Gobalsamy says.
- There is no reason to raise capital at present, and growth plans in the first instance would be self-funded, Gobalsamy says.
- But having no debt on the balance sheet, he adds, is “a bit lazy.”
- Raising firstly debt and then equity may be considered in the future, he says. “I am sure the shareholders would support us.”
Balance-sheet deleveraging led the GCR Ratings service to upgrade Omnia’s long-term issuer rating to A, with a stable outlook, last August. The company has refocused on core business lines and in October sold Umongo, a supplier of lubricant additives and base oils, to Azelis subsidiary Orkila.
Profit more than doubled to R507m ($33m) in the six months to 30 September from a year earlier. Omnia said in November that the global mining sector has seen an increase in pipelines, exploration and capital expenditure based on higher commodity prices.
- The business is “clearly resilient” through the pandemic, Gobalsamy says. “We have an important role to play in primary sectors. Agriculture and mining are fundamental to economic growth.”
- The company’s shares have recovered from a low around 1,500 rand in mid-2020 to 6,018 rand now.
- Still, Covid-19 is putting a brake on the expansion plans. Gobalsamy would like to be able to grow in Australia and east Africa within the next three years, but looking for partners or acquisition targets is complicated by travel restrictions.
- “The most important thing is to find the right partners,” he says. “To grow our business, we need travel and logistics to open up”.
Omnia has the ammunition to expand its international portfolio once travel restrictions ease.
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