Bidvest CEO Madisa upbeat

Diversified industrial group Bidvest, which recently made its debut in Australia’s facilities management and general cleaning markets, remains active on the acquisition and investment trail. Business Day spoke to Mpumi Madisa about the group’s next move and how it will maintain its growth momentum

Diversified industrial group Bidvest, which recently made its debut in Australia’s facilities management and general cleaning markets with the acquisition of BIC services, remains active on the acquisition and investment trail.

Business Day spoke to Mpumi Madisa, the only black female CEO among the top 40 JSE-listed companies, about the group’s next move and how it will maintain its growth momentum after paying its biggest total dividend in seven years.

After acquiring BIC in Australia, how does the Bidvest growth strategy outside SA look in the near term?

In terms of our offshore strategy, we are very clear that outside SA we’ve got no intention of duplicating Bidvest. We have three focused niche areas. What you will see is a Bidvest where our exposure in the plumbing, hygiene and facilities management space will be much higher than what it is at the moment. The one area that is lagging behind is plumbing and related products as we have not found the right acquisition. But we continue to assess opportunities.

What are the biggest challenges the diversified group is facing?

Power, the energy crisis in SA is real. We’ve got factories and warehouses, and we have branches in the retail space and when there is no power we can’t operate. In our factories and warehouses, we have introduced a combination of solar and generator power.

I think what has struck this time is that we’ve seen extended periods without power ... you can’t run a generator for six hours. So the big focus for us after this year is how to get a better energy mix with more solar, which is a big capital expense. The energy crisis has really been a problem.

Another issue is the reliability of supply chains since 2020, which has not normalised and we have had to focus on inventory management, making sure we have stock to supply into increased demand. Inventory levels were about R1bn higher on the balance sheet.

Supply chains since 2020 have not normalised at all and so we have had to focus on inventory management, making sure we have stock to deliver for the increased demand. Whereas it used to take about two to three months to transport goods out onto the ships, it now takes about four to six months, so that’s been challenging, but we are managing it.

Can you give an update on where Bidvest’s investment in building an inland liquefied petroleum gas (LPG) terminal is?

We have two projects in our freight division that have been approved. The board committed R1bn in this financial year, which would be R500m for the LPG inland terminal and R550m for multipurpose tanks in Richards Bay.

The inland terminal is, however, dependent on rail, so we haven’t been able to make progress, because we are seeking more certainty as we want to move the gas in bulk from Richards Bay to Isando, which is where we want to build the terminal.

We’ve had various discussions with Transnet Freight Rail and the problem is one of rail capacity. Transporting LPG by road is not ideal, so our Achilles’ heel is rail, which is a dependency beyond our control. We are talking to Transnet about an alternative site.

Where are the green shoots in the near term?

We’ve seen a material uplift in our businesses that have been impacted by the travel and tourism industry. Recovery has been good, but still not at preCovid-19 levels. I believe there is still somewhat of a rebound to come through significantly in the 2023 financial year.

The other area is renewables and alternative energy. The president lifted the 100MW cap for self-generation and we think that will stimulate activity from the perspective of renewables, benefiting Bidvest’s electrical businesses.

WE ’ VE GOT A GOOD PIPELINE WITH SOME LOCAL ACQUISITIONS WE ARE LOOKING AT

OUR EXPOSURE IN THE PLUMBING, HYGIENE AND FACILITIES MANAGEMENT SPACE WILL BE MUCH HIGHER

Then there are those industries that are buoyant and we don’t see them slowing down. The online industry is still growing, and mining and agriculture are still buoyant.

Any acquisitions in the near future you can let us in on?

All I can say is that we’ve got a good pipeline with some local acquisitions that we are looking at. Offshore we are still in Europe and other areas, looking at the industries I’ve mentioned.