Expand on its platform
Having embarked on a fairly aggressive acquisition spree since being listed in 2012 – which culminated in the acquisition of Control Instruments earlier this year – Torre now aims to expand its West African platform and continue to add bolt-on acquisitions to its operations in South Africa.
Some very astute investors have been paying attention. The share register, besides boasting some large institutions like Momentum and Investec, includes the likes of Chris Seabrooke (Sabvest), Eric Ellerine and Titan Share Dealers (Christo Wiese). The business is 25% owned by management and founding shareholders.
CEO Charles Pettit says that they have aspired to build an Invicta-type industrial consumables and components business, structured into three divisions. The Plant and Equipment division contains the old SA French, now increasingly diversified and rebranded as ‘Torre Heavy Lifting’. Manhand is a materials handling business that is focused on cost effective forklift and warehousing equipment (and includes the old Forktech business), and Kanu Equipment, the Bell and Liebherr Equipment dealer (among others) for West and Central Africa.
The Services and Supplies division stocks inventory including parts and consumables, and includes the domain of the company’s first acquisition TGS. TGS sells aftermarket repair and wear parts for Caterpillar-type earthmoving equipment. This division also includes Control Instruments, which has been renamed Torre Automotive. “We have installed a new management team, refreshed some of the brands and the opportunity now for us is to integrate the business into our African footprint,” said Pettit. Torre is currently in a closed period as it prepares f inancials for the f ull year to end June, and Control Instruments will only be included for two months of this period.
The Financial Solutions division is a business enabler for the company’s two other operating divisions. “This is a pure organic strategy,” says Pettit. “We wanted to structure leasing and financing options for equipment purchases in Africa, but our customers can’t get the finance they require in those geographies. So this division will facilitate sales and the smooth functioning of the business.”
Smart acquisitions are what have enabled the company to build scale, and most of them have been done paying with cash. Pettit thinks this will continue: “Once you have reached scale, bolt-on acquisitions become very accretive. We are small, so we are looking to do deals within our core area of competence. We have pretty substantial operations in West Africa, so we will probably invest directly into those businesses. The markets we operate in South Africa are not very high growth, so to get earnings growth you need to do acquisitions which will be an ongoing feature of our business.”
The business has plans to grow organically through adding more agencies to its offering, and giving competitors a run for their money. “Lots of our customers are struggling at the moment, and in the after-market I think there is an opportunity to try and win market share by helping them trade through some of their working capital challenges, so we are looking on the positive side of the current environment.”