SA’S Vela, Smec to merge operations

SOUTH African engineering consulting firm Vela VKE said yesterday it would merge with the Australian engineering consulting firm Smec, in order to win further contracts in other African countries.

Vela is involved with projects that are part of SA’s more than R3-trillion infrastructure spending plan announced in February.

“About 10 years ago there was a large buy-up of South African engineering companies.

“We were not bought but we were approached by suitors from the US, Australia and elsewhere.

“In 2009, we began discussions with Smec, a company that has managed to pull off projects in difficult markets like Afghanistan. This attracted us as we wanted to tap into markets which can be challenging such as those in the Democratic Republic of Congo for example,” Vela CEO Thomas Marshall said.

Mr Marshall could not reveal the cost of the merger because of Australian disclosure rules.

Vela has worked in countries such as Zambia and Tanzania. Its current main South African projects are in water, bridge and industrial infrastructure. Vela was appointed by the state-owned enterprise Trans Caledon Tunnel Authority as part of the Mokolo Crocodile Consultants joint venture to design and supervise the Mokolo Crocodile Water Augmentation project, which looks to create facilities to bring water to power stations and coalfields in Limpopo.

Mr Marshall said Smec’s substantial investment in Vela VKE demonstrated confidence in the future growth of infrastructure initiatives in SA and elsewhere in Africa.

“As a Smec group company, Vela VKE will be serving the interests of existing and new South African clients, through the provision of high-end engineering consultancy services, ranging from mining and transport, to urban and social development,” he said.

Smec CEO Ross Hitt said the deal would extend his firm’s consulting capacity, which had been in east and southern Africa for more than 30 years, to much of the rest of the continent. “Smec is honoured to be partnering with such an awardwinning company that has a great industry profile, a strong base of valued clients and a high calibre of 1 000 committed employees working throughout SA and in other Sadc countries,” he said.

Economists have highlighted a need for greater foreign direct investment in SA. Recent deals, such as US Walmart’s takeover of Massmart and Japanese Kansai’s of Freeworld, have faced extra scrutiny from SA’s competition authorities.

But Mr Marshall said even though his deal had taken “a couple of years”, meeting competition rules had been “surprisingly easy”.

“Our biggest problem was with the South African Reserve Bank as their were various issues with share swaps and exchange controls,” said Mr Marshall.

Part of the deal is that some black Vela employees will take on shareholdings in Smec.