Kagiso Tiso Holdings (KTH) has acquired a 51% stake in a business service provider Servest Group (Servest) to form the largest, majority black-owned, facilities management company in Africa, in a transaction valued at about R4.5bn ($373m).

Vuyisa Nkonyeni, CEO of KTH, said: “This transaction demonstrates clear delivery against KTH’s strategy of acquiring meaningful or majority stakes in fast growing companies which are supported by strong management teams and have good exposure to African market opportunities.”

“In the South African market, we will identify investments that will afford us significant influence or control alongside like-minded partners,” he said.

Servest provides integrated facilities management solutions to more than 6 500 clients on 24 000 sites in South Africa, with key markets in East, West and Southern Africa as well as the UK.

Key services include inter-alia cleaning, parking, catering, hygiene, office service, landscaping to clients such as Transnet, Netcare Group, Anglo Platinum, Debswana, Sasol, Sainsbury, BBC and the UK’s House of Parliament among others.

The transaction makes Servest the largest, majority black-owned, facilities management company in Africa, strongly positioning it to expand its footprint across the rest of the continent.

In the South African context, this will give Servest an advantage over other large facilities management companies, with over 51% black ownership, under the new revised BEE codes which came into effect on May 1, 2015.

As part of the transaction, KTH Group Chairman and Co-Founder, Kenton Fine, will facilitate equity participation of management as part of a talent management and transformation plan.

Kevin Derrick, CEO of Servest, said this deal represents so much more than just an empowerment transaction.

“This not only clearly demonstrates our ongoing commitment to transformation and long term sustainability, but brings with it significant opportunities for future growth, expansion and job creation,” he said.

Beyond the commercial rationale, both parties see the transaction as an important step in driving further transformation at Servest.

Servest's Fine said: “We have enjoyed a very successful and long-standing relationship with our exiting shareholders, RMB Corvest and Shalamuka, and are delighted at the prospect of partnering with a professional organisation of the calibre of KTH.”

“With similar values entrenched in both organisations, we look forward to embracing the additional experience and knowledge that KTH will bring, further underpinning our continued ambitious growth strategy into the future,” he said.

The acquisition remains subject to regulatory approvals including South African Competition Commission approval.

To date, KTH concluded transactions which involved R5.1bn of disposals, follow on investments and portfolio company restructurings.

Since 2011, KTH completed R3.3bn, including a pan-African investment in Fidelity Bank and a minority take-out and delisting of Kagiso Media in 2013.

In addition to Servest transaction, KTH expects to conclude another significant acquisition in West Africa imminently.

Jacob Hinson, KTH’s CIO, said: “Our investment strategy seeks to achieve active participation in fewer, prominent investments, with strong management teams that will drive growth across the continent.”