Multinational JSE-listed, engineering-led contractor Aveng has announced plans to divide its operations into two separate entities: McConnell Dowell and Aveng Limited.
This move follows an in-depth evaluation of the company’s corporate structure. It aims to give each business the autonomy to pursue independent growth strategies and access funding pools suited to their unique investment needs.
What led to this decision?
Aveng identified that its two main operating businesses, McConnell Dowell and Moolmans, have different business characteristics and value propositions.
As a result, they require distinct growth strategies and financial resources. By operating independently, both companies can better pursue their unique objectives and secure appropriate capital.
McConnell Dowell which is a major player in infrastructure and building, and Moolmans, a contract mining business, operate in different markets with separate value propositions.
As such, Aveng split them into independent entities, believing that both McConnell Dowell and Moolmans would be better positioned to attract the capital needed to support their specific investment requirements.
“The review has concluded that Aveng’s two operating businesses, McConnell Dowell and Moolmans, have distinctly different business characteristics and value propositions and as a result should pursue independent and separate operating and growth strategies,” Aveng said in its annual results statement.
“This will assist each business to independently access appropriate pools of capital to better support their investment requirements.”
How will the split work?
Aveng recently segmented its businesses under three operating brands, McConnell Dowell, Built Environs and Moolmans.
McConnell Dowell, which focuses on engineering-led construction and infrastructure projects, will include the Built Environs brand and may explore a listing on the Australian Securities Exchange (ASX) and the Johannesburg Stock Exchange (JSE).
Meanwhile, Moolmans will remain under Aveng Limited and will consider alternative ownership options, including the potential introduction of the introduction of broad-based Black Economic Empowerment (BEE) capital.
Why now?
The timing of the split aligns with Aveng’s return to profitability and positive cash flow in the year ending June 2024. The group reported an increase in operating earnings, driven by the infrastructure and building segments.
McConnell Dowell, the infrastructure arm, has shown strong operational performance, despite setbacks like losses on the Batangas LNG terminal project in the Philippines. As a matter of fact, McConnell Dowell has already secured 80% of its projector revenue for 2025.
The move to separate the businesses allows each entity to capitalize on its strengths and focus on growth in its respective markets.
Recent changes within Aveng
This comes amidst extensive restructuring within Aveng. The company has made several changes to their operations including disposing of non-core businesses.
The firm also experienced changes to its leadership, with Scott Cummins, the former CEO of McConnell Dowell, taking over as CEO of Aveng from Sean Flanagan, who now serves as a non-executive director.
Additionally, the company has shifted its management epicentre to Australia, although governance and control remain in South Africa.
Moreover, Aveng restructured its operations under three brands: McConnell Dowell, Built Environs, and Moolmans.
