Durban - Electrical supplies company ARB Holdings plans to expand into other parts of southern Africa within the next five years to offset an expected slowdown in its business locally as South Africa's electrification programme nears its completion.
The company, which has annual sales of more than R1 billion, will list on the JSE main board later this month.
It owns ARB Electrical Wholesalers and its growth has been largely driven by the government's plans to electrify all the country's households, a programme expected to be completed by 2012.
ARB Electrical Wholesalers, which is an example of a local company benefiting from government expenditure, supplies locally manufactured power cables, general electrical contracting materials and overhead line transmission.
The group has begun doing work in Angola, Zambia, Botswana, Mozambique and Madagascar, but according to chief executive Craig Robertson: "That is a very small part of the business at this stage.
"Our core focus is to expand our footprint in the various neighbouring countries and we will be targeting mines, corporate electrification and rural areas," said Robertson.
"Our business has grown through the electrification of outlying areas and low-cost houses. We have aligned ourselves to be well placed to continue with that market and the government wants all the homes to have electricity by 2012. After that, it will be southern Africa, where 250 million homes are still without electricity."
ARB is looking to supply cables to new mines being developed in Zambia, Angola, the Democratic Republic of Congo, Mozambique, Madagascar and Botswana.
In South Africa there are 2.4 million low-cost houses that have been built since 1994, and the government plans to build 2.3 million more. South Africa has 11 million households, of which 3.4 million still need electricity, according to the department of minerals and energy.
The 27-year-old firm was started by Alan Burke, who is still a major shareholder, in 1980. In November 2005, ARB sold a 26 percent share to Batsomi Power, a black economic empowerment firm started by Jacob Modise, the former chief executive of Johnnic Holdings.
The group intends to raise up to R371 million through the sale of new shares and existing shares. The proceeds will be used to repay debt and fund the growth of the company, including through acquisitions.
"We are very bullish about the electricity business in South Africa," said Robertson.
"And we do have an acquisition in mind, but if that does not materialise, then we will look at other expansion programmes. We still need to move into Bloemfontein, Mpumalanga and Limpopo."
Robertson said the company was looking at opportunities created around the 2010 soccer World Cup and was in negotiations with a number of stadiums.