Dominic Sewela’s Barloworld $1.2 billion bid gets PIC backing

Key Points

• South Africa’s largest asset manager endorses Dominic Sewela’s takeover, boosting total shareholder support to 46.9% for privatization.
• Newco pledges a 13.5% BEE transaction post-acquisition, contingent on delisting, aligning with PIC’s public interest requirements.
• Standard Bank commits $913 million to the bid, while Barloworld’s largest minority shareholder opposes, citing undervaluation concerns.

The Public Investment Corporation (PIC), one of South Africa’s largest institutional investors, has formally committed to backing Newco’s proposed R23 billion ($1.2 billion) acquisition of Barloworld, a leading industrial conglomerate led by CEO Dominic Sewela. 

The PIC has pledged its support by agreeing to accept a standby offer for 41.6 million Barloworld shares, which translates to 21.93 percent of the company’s total issued shares. However, should Barloworld remain listed on the Johannesburg Stock Exchange (JSE), the PIC could retain a portion of its holdings to comply with internal index weighting requirements.

Strategic backing for delisting ambitions

The proposed takeover of Barloworld, launched by a consortium led by Sewela and Saudi Arabia’s Zahid Group, first surfaced in late 2024. Although the PIC had previously raised red flags over Barloworld’s governance processes, the new commitment suggests those concerns may have been sufficiently addressed. 

Barloworld shares are listed on both the Johannesburg Stock Exchange (JSE) and A2X Markets. If the consortium secures more than 90 percent shareholder support, the company will delist and move into private ownership under Newco. However, should Barloworld remain listed, the PIC has reserved the right to retain a portion of its stake to meet index-weighting obligations.

BEE deal sweetens the offer

To secure regulatory and public sector backing, Newco has also pledged to launch a 13.5 percent broad-based Black Economic Empowerment (BEE) transaction post-acquisition — a condition tied closely to the PIC’s public interest mandate. 

However, this BEE commitment is contingent on a successful delisting. Should less than 90% of minority shareholders accept the offer — and the threshold not be waived — the BEE deal will not proceed, given its incompatibility with Barloworld’s listed status. 

Newco has also committed to voluntarily presenting the BEE structure to the Competition Commission of South Africa, allowing the PIC to retract support should the merger terms shift without transparency

Support from key financial players

Barloworld, founded in 1902, continues to be one of South Africa’s top industrial companies, with a diverse portfolio spanning distribution, services, and industrial processing. Sewela, who holds a 0.23 percent stake (428,401 shares valued at over $2 million), has a strong personal interest in the company’s future.

In addition to the PIC’s backing, Standard Bank has committed R17 billion ($913.2 million) to support the R23 billion ($1.23 billion) takeover. However, the offer faces resistance from UK-based Silchester, Barloworld’s largest minority shareholder, who argues that the bid undervalues the company.

As the deal progresses, the PIC’s continued involvement will be crucial in determining the outcome of Newco’s acquisition plans. Should the takeover succeed, it could lead to a significant shift in South Africa’s industrial sector, setting the stage for further consolidation and transformation within the industry.