South African industrial group Imperial is to acquire German logistics firm Lehnkering from Lukas Sweden AB for €173-million, in order to grow and diversify its international logistics business and strengthen its position in Germany, its second home market.

The transaction will also see Imperial assume debt of €97-million, taking the total enterprise value to €270-million.

"The management team of Imperial Logistics International is highly experienced and competent players in the European logistics market, and as a result, our base in Germany is ideally suited to be the hub of our international activities outside Africa," Imperial said in a statement last week.

"The German operations have traditionally delivered excellent returns on capital for the group."

Lehnkering operates in defensive customer industries, focused mainly around chemicals, and will provide Imperial with an ideal opportunity to expand into global emerging markets that are served by German exports.

"Imperial wished to increase their presence in this industry based on the know-how and experience we have in shipping, contract logistics, distribution and warehousing."

Outsourcing in the chemicals industry

Lehnkering also provides outsourced services where it synthesises, mixes and packages chemical products on behalf of its clients.

Imperial has experienced a similar evolution in its contract logistics business, Panopa, which started as purely a logistics service provider and over the years became more entrenched in its customer base through sub-assembly on behalf of motor manufacturers.

The trend to outsourcing in the chemicals industry is expected to grow as chemicals suppliers tend to focus on their core business of product development and marketing.

"The Lehnkering acquisition will further improve Imperial's competitive position in European inland shipping, ports and terminals operations, warehousing and distribution and contract logistics," the company added.

The acquisition will be funded from new euro denominated banking facilities secured for the acquisition for a period of five years. Imperial has in addition obtained permission from the South African Reserve Bank to fund a portion of the acquisition from its South African operations.

The effective date of the acquisition is expected to be at the end of 2011 or in the first quarter of 2012, subject approval from the necessary regulatory authorities.

SAinfo reporter

The most advanced, broad-based industrial sector on the continent.

Foreign investors are increasingly aware of the huge long-term growth possibilities that Africa presents, according to Ernst & Young's first Africa attractiveness survey, which predicts that foreign direct investment (FDI) inflows into the continent will reach US$150-billion by 2015.

Published earlier this month, the survey combines an analysis of investment into Africa over the last decade with a survey of over 562 global executives on their views about how and where investment will take place in the next decade.

The survey shows that Africa has seen an 87% increase in inward FDI over the last decade, from 338 new projects in 2003 to 633 in 2010.

"Despite a drop in investment in the last couple of years following a peak in 2008, Africa has remained an attractive investment destination throughout the global downturn and has managed to maintain its relative share of global investment flows as a result," Ernst & Young said in a statement.

"Strong growth in new projects into Africa is expected from next year, with FDI inflows forecast to reach $150-billion by 2015."

'There is far more to come'

When it comes to future investment strategies, Africa is high on the agenda of global investors, with 42% of the businesses surveyed considering investing further in the region, and an additional 19% of executives confirming that they will maintain their operations on the continent.

Those companies that have invested and already integrated Africa into their overall investment strategy are particularly positive, the survey finds.

"FDI has a particularly important role to play as a future source of longer-term capital for reinvestment in infrastructure initiatives and as an accelerator of sustainable growth across Africa," said Ajen Sita, Ernst & Young's managing partner for Africa.

"And there is far more to come," Sita added. "Although the African share of global FDI has grown over the past decade, we believe that it does not reflect the increasing attractiveness of a region that has one of the fastest economic growth rates and highest returns on investment in the world."

Emerging markets take a growing interest

According to the survey, Africa is becoming increasingly attractive to international investors, particularly to those in emerging markets.

Investment from emerging markets increased at a rate of 13% per annum over the last decade, from 100 new projects in 2003 to 240 in 2010, and now comprises 38% of the total into Africa, up from 30% in 2003.

In Ernst & Young's survey of leading global businesses, 74% of emerging market investors said that Africa had become a more attractive investment destination over the last three years. They were also increasingly positive about Africa's long-term investment potential.

"There has been a fundamental shift in the global economy over the past few years, with emerging markets not only dominating investor attention and capital flows, but also playing an increasingly strategic role in defining the global economic agenda," said Mark Otty, Ernst & Young's area managing partner for Europe, Middle East, India and Africa.

Developed regions such as Europe and North America are more ambivalent, however, with a large proportion of respondents from these regions seeming to believe that Africa's progress had stalled over the last few years. However, North American respondents were more optimistic about Africa's long-term investment potential, with Europeans remaining relatively pessimistic.

"While investors from developed markets are relatively more cautious about Africa, they still represent the largest proportional investment into Africa and, critically, this investment is going into a diverse range of sectors beyond natural resources," said Ernst & Young.

Moving away from extractive industries

Unsurprisingly, the large majority of respondents viewed Africa's oil and mining industries as the sector with the greatest growth potential over the next few years.

However, the survey finds that a more diverse range of sectors are beginning to emerge as attractive investment options, with tourism (15%), consumer products (15%), construction (14%), telecommunications (13%) and financial services (9%) featuring strongly as offering high-growth potential among respondents.

Still on a par with Latin America, Eastern Europe

"Despite the relatively positive and improving perceptions of Africa, it is in competition for the international capital and resources that will help drive and sustain growth and social development," Ernst & Young said.

The continent is currently ranked in the same category as Latin America and Eastern Europe in terms of attractiveness for investors.

"African markets must position themselves appropriately in this shifting landscape to accelerate growth and development and avoid getting left behind by other emerging markets and regions," said Otty.

African success stories

The African growth story in the last decade is underpinned by a longer-term process of economic and regulatory reform that has occurred across much of the continent since the end of the Cold War, the survey notes.

Over this period, inflation has been brought under control, foreign debt and budget deficits reduced, state-owned enterprises privatised, regulatory and legal systems strengthened, and many African economies opened up to international trade and investment.

Ernst & Young's analysis of FDI projects shows that that investment success stories are spread across the continent. Ten African countries – South Africa, Egypt, Morocco, Algeria, Tunisia, Nigeria, Angola, Kenya, Libya, Ghana – attracted 70% of new FDI projects between 2003 and 2010.

There has also been significant growth of 21% in the investment by African countries within Africa between 2003 and 2010. "However, despite the considerable growth in the number of projects, the amount of capital remains less than that provided by other emerging economies."

Strong growth from 2012

Although the majority of survey respondents were optimistic about Africa's future, most believed that the continent would only offer high and robust growth potential over the longer term (beyond three years).

"Strong growth in new FDI into Africa is expected from 2012 onward, reaching US$150-billion by 2015," Ernst & Young said.

"Besides the critical importance of capital, which can continue to be reinvested in infrastructure, and other long-term developmental initiatives, this will create a number of the other direct and indirect benefits. Not least among these will be job creation; in 2015 alone, the estimated number of jobs created will be over 350 000."

According to the survey, the continued growth of FDI will be based in part on the economic recovery of Africa's main developed market investors, and the continued strong growth of emerging markets such as China and India.

"The GDP growth of Africa will continue to remain robust, averaging a healthy 5% up to 2015, predicated partly on an assumption of continued strong demand for, and high prices of, commodities."

Investment window

The levels of risk in investing in Africa can be high, but levels of profitability are high too, with competition in some sectors comparatively low, said Sita.

"This investment window may not remain open for long, but it suggests that Africa actually appears to be relatively well positioned, with the only emerging region clearly ahead in terms of investor perceptions at this point being Asia.

"There are of course parts of the continent where there are real and perceived barriers to investment due to political instability and corruption," Sita said. Notwithstanding these challenges, Ernst & Young was "confident that Africa is on a sustainable growth curve and that FDI rates will steadily grow.

"However, to accelerate and take advantage of this growth process, governments and investors – foreign and domestic – should act now. The earliest to do so, and the canniest, will benefit the most."

SAinfo reporter

African countries should now focus on converting optimism in the continent's future into action, business and government leaders said during the closing session of the 21st World Economic Forum on Africa in Cape Town on Friday.

"The mood has changed from thinking of Africa as a forgotten continent to Africa as a continent that holds hope," said Bank of Botswana governor Linah Mohohlo. "But we cannot afford to be complacent."

Mohohlo called on African countries to be much more welcoming to investors and to "quickly learn how to manage the risks" that would inevitably increase as more international capital flowed into the continent's economies.

"What we have to pursue with vigour is inclusive growth that will generate additional opportunities and contribute immensely towards poverty reduction.

"And we must include women," Mohohlo added, "because when you educate a woman, you educate a village, a society, a country and, ultimately, the continent."

Ethiopian Deputy Prime Minister Added Hailemariam Desalegn said the continent needed to build capacity at all levels in order "to deliver and discharge its policies and responsibilities".

Nestlé board chairman Peter Brabeck-Letmathe said the first question was "whether Africa's economic boom will allow it to break the cycle of poverty", while KPMG International chairman Timothy Flynn said the real challenge was "how do we accomplish the things [we have to do] and get people to come together."

Flynn said that, in light of what he had learned about the increasing efforts to deepen African regionalisation, he would accelerate the integration of his company's businesses across the continent.

Eskom Holdings chairman Mpho Makwana said African countries should focus on developing their skills and human resources, especially by harnessing the talents of Africans in the Diaspora. "We need to make the building of robust private sectors an urgent priority and promote true entrepreneurship, because that is how jobs are created," Makwana said.

Oando Nigeria group chief executive Jubril Tinubu said it was also critical for African countries to improve their educational systems, in order to ensure that they had the skills they would need to pursue the opportunities that were emerging.

Source: World Economic Forum

Brad Morgan

A holiday does one good, they say. South African golfer Thomas Aiken would certainly agree. Following a seven-week break, he returned to action in the Spanish Open last week and promptly secured his first European Tour title.

Aiken's win on Sunday was the fifth by a South African on the European Tour this season, following Ernie Els's win in the South African Open Championship, Louis Oosthuizen claiming the Africa Open, and Charl Schwartzel triumphing in the Joburg Open and the Masters.

Dale Hayes previously won the Spanish Open in 1971 and 1979, and Charl Schwartzel lifted the title in 2007. Aiken's victory was the 99th by a South African on the European Tour.

Tribute to Seve

After claiming his maiden win, Aiken paid tribute to Seve Ballesteros, the tournament winner in 1981, 1985 and 1995, by dedicating his victory to the charistmatic Spaniard, who passed away on Saturday at the age of 54.

"He was everything to the game of golf and I am happy to have won for him. Any of us would have won for him," said Aiken.

During his seven-week break, Aiken went four weeks without lifting a club. One wouldn't have guessed that when he opened his challenge with a four-under-par 68, which left him two shots behind first round leader Scott Jamieson.

A second successive 68 left Aiken with a one-shot lead at the halfway mark on eight-under 136, one shot clear of Pablo Larrazabal and two clear of Jamieson and Alvaro Velasco.

Two-shot lead

The third round proved to be very testing for the field and a level-par 72 was enough to see Aiken increase his lead to two shots heading into the final round.

He built his advantage up to as many as four shots on the inward nine before finishing with a two-shot win on 10-under-par 278 after a two-under 70 over the final 18 holes.

Aiken's victory secured him a place in the lucrative and prestigious 2011 WGC – HSBC Champions tournament in November at the Sheshan Golf Club in Shanghai. More importantly, it gained him exemption on the European Tour for two years.

Then, of course, there was the winner's cheque of €333 330 (approximately R3.2-million), the biggest prize of Aiken's career so far.

'I'm ecstatic'

Reflecting on his first European Tour title, Aiken told Sapa: "I don't think it's quite hit home yet, I've been waiting for this for a long, long time and I've been knocking on the door. I'm ecstatic."

It took him 104 European Tour events to claim a title, a long wait, but not when compared to Tim Clark waiting 206 events before winning on the PGA Tour.

The Spanish Open was the ninth win of Aiken's career.

Seven of his wins have come on South Africa's Sunshine Tour, including three in 2004. His first professional victory came on the PGA EuroPro Tour in 2003 in the Stoke by Nayland Classic.