South African construction firm Aveng said on Friday it terminated an agreement to sell a 51% stake in its Grinaker-LTA unit to a black-owned company, after the acquiring firm failed to fulfil funding conditions.
Aveng said Kutana Construction, which is now known as Singabakhi Holdings, failed to meet funding requirements including raising an upfront payment of R20 million, by the fulfilment date to complete the deal meant to create opportunities for black contractors.
The deal was aimed at helping the 125-year-old Aveng become profitable again and introduce a black partner aligning it with the government’s plan aimed at transforming the construction industry and giving black people an ownership role.
Aveng said it still aimed to abide by an agreement with the government last year, where six South African construction companies said they will contribute a total of 1.25 billion rand ($92 million) over the next 12 years towards a fund to develop skills in the sector and give black workers a bigger role.
The deal gave companies an option of either mentoring up to three emerging black-owned enterprises or selling not less than a 40% economic interest to a firm that is more than 51% black-owned, managed and controlled.
