Consortium Acquires Super Group's AutoZone

Monday, 21 June: Zico Capital, the investment company chaired by businessman Sandile Zungu, together with RMB Corvest and management, has purchased a 100% interest in Autozone, a retailer and wholesaler of automotive parts.

"We are very pleased to have concluded this transaction and believe that there is significant potential in the automotive parts industry," said Chief Investment Officer of Zico Capital, Tshego Sefolo.

The transaction sees the consortium purchase the automotive spare parts wholesaler for R435 million from holding company Super Group. The transaction was unconditionally approved by shareholders on Tuesday, 15 June.

Sefolo said that Zico Capital expects the auto industry to recover over the next few years which should benefit after market automotive parts industry. "Significant growth in new vehicle sales between 2004 and 2007 will impact Autozone positively over the next 5 years as vehicle-ages reach 5 to 12 years. The automotive spare parts industry is driven by older vehicles that are no longer under warranty and possibly no longer manufactured. As the consumer has generally not been in the financial position to buy a new vehicle over the last few years, it will need to be maintained."

Although new vehicle sales declined during the recession, NAAMSA has forecasted a recovery in sales in 2010 of around 5%. This bodes well for the spare parts sales pipeline.

Autozone brands were consolidated in 1999, and it currently boasts the largest wholly-owned branch network in the country with 11 wholly-owned wholesale branches, 82 wholly-owned retail branches and 50 member-owned franchise branches in South Africa and with a presence in Namibia and Botswana. "We believe that there is a considerable opportunity to expand the retail footprint inline with the expected increase in demand and volumes."

Autozone products include general products such as oil and chemicals, electrical products and light duty engine components; and specialised products which include heavy duty engine, heavy duty friction and diesel injection components. "Zico Capital aims to add solid operational and business development skills to the investment," concludes Sefolo.

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