Barloworld transaction bodes well for SA foreign investment

The R23-billion Barloworld take-private transaction, a significant milestone in South Africa’s mergers & acquisitions history, is being hailed as a strong signal of growing foreign investor interest in the country’s industrial and infrastructure sectors, says Sydney Mhlarhi, managing director of Tamela, a leading boutique investment, corporate finance advisory and fund management firm.

Tamela acted as lead financial and strategic adviser to the buyer consortium comprising the Sewela family and the ZAHID Group. Barloworld had been a longstanding client of Tamela, when in September 2023 the company sought input on the possibility of divesting.

Mhlarhi says what initially seemed like a remote possibility evolved into a highly complex, multi-jurisdictional transaction that has set the tone for similar deals in South Africa and on the continent going forward.

“Initially, as the idea took hold, the prospect of a public to private buyout was quite daunting. And, importantly, Caterpillar – which accounts for 80% of Barloworld’s business – had to be on board.”

Tamela assembled a team to explore the various possibilities and investigate the best legal and funding partners to take the transaction forward. The transaction evolved with the emergence of key players: Entsha Proprietary Limited, a newly incorporated entity owned by the Sewela family; and 49% Gulf Falcon Holding, a subsidiary of Saudi Arabia’s ZAHID Group, which already had 19% shareholding in Barloworld.

The partnership created a transformation-aligned South African ownership structure, complemented by an international strategic capital partner with deep sector expertise.

The deal’s unfolding occurred within a highly sensitive and closely scrutinised public environment. Execution spanned 26 months and required regulatory processes across multiple jurisdictions, including South African exchange control, takeover regulation and competition approvals in various countries. The combination of cross-border dynamics, geopolitical sensitivity, public scrutiny and detailed execution requirements made it a uniquely complex and strategically significant transaction.

Today, the transaction stands as one of the most significant corporate transactions of 2024 and 2025, reflecting the consortium’s conviction in Barloworld’s long-term investment thesis and the resilience of the geographies in which it operates.

According to Augostino Sfeir, ZAHID group chief investment officer, “This is a southern African transaction that involved dealing with government-related entities, regulators, banks and different stakeholders and which – without the Tamela team’s local expertise – we wouldn’t have ever closed the deal.”

Mhlarhi stresses the transaction would not have come to a successful close without Tamela head of Corporate Finance and director Tshepisho Makofane’s resilience, foresight and ability to manage sustained uncertainty. “Over 26 months, he provided strategic clarity, strong relationship management and unwavering commitment, demonstrating a rare combination of technical depth, calm judgment and leadership under pressure.”

Mhlarhi says the transaction’s success demonstrates confidence in South Africa’s long-term value, strong fundamentals and potential for growth in key sectors, and shows that foreign investors can align with local transformation goals. He adds that as the largest private-sector cross-border transaction by a Saudi investor into South Africa, the deal represents a major endorsement of the country’s investment climate and economic prospects.

“It also establishes a benchmark for intricate, multi-jurisdictional deals, underscoring the importance of rigorous due diligence, robust legal structuring and comprehensive stakeholder engagement, serving as an important reference point for other large-scale transactions in South Africa.

“As Tamela, we are proud to have been involved in a deal of this significance. I believe it reinforces our core principles of trust, partnership and professionalism and positions us firmly as trusted corporate finance advisers,” concludes Mhlarhi.