Actis, a leading private equity investor in emerging markets, has sold its 56.6% stake in Lenco, a significant plastic packaging company in South Africa, to Mondi Packaging South Africa (Pty) Ltd ("Mondi Packaging South Africa"). The balance of the Lenco stake, held by Brimstone Investment Corporation Ltd (25%) and the Lenco management (18.4%), has also been sold to Mondi Packaging South Africa. The total cash consideration for the deal is R780 million. The disposal is subject to certain suspensive conditions including, inter alia, approval by the Competition Authorities.

In 2003, Actis led and arranged the leveraged management buyout (MBO) of Lenco alongside the incumbent management of Lenco, to support the company's expansion plans. Actis also introduced Brimstone, a black economic empowerment (BEE) group, as a shareholder.  The transaction was one of the largest MBOs in Africa in 2003.

Lenco specialises in the manufacture of rigid plastics and the company has around 1,270 employees.  The operating divisions are Versapak, which manufactures expanded polystyrene packaging and PVC stretch film products; Xac-PET, manufacturing PET products, such as soft drink bottles; and Xactics/Elvinco which uses extrusion blow and injection moulding to produce bottles, containers and closures for the food, beverage, household and toiletry industries. Lenco was awarded a significant ABI bottling contract in January last year to make tubes for all of ABI's 500ml, 1 litre and 2 litre plastic bottles enabling Lenco to be the largest converter of polyethylene terephthalate plastic in South Africa.

Mondi Packaging South Africa is a black economically empowered company which provides environmentally responsible specialised paper and packaging solutions. It is the market leader in corrugated paper packaging in South Africa.  It is owned by the Mondi group (55%), Shanduka Resources (40%) and an employee share ownership plan (5%). The Mondi group is owned 100% by Anglo American plc.

Fungai Ruwende, investment principal at Actis, said, "Lenco was looking to widen its customer base and grow its market share as an 'empowered' company."

"The management team were also keen to work alongside an investor with the requisite financial strength and one which is dedicated to helping management teams build successful businesses. Actis saw the potential for Lenco to become a key player in South Africa's expanding packaging industry and their reputation as an innovator meant the business had excellent growth prospects", said Ruwende.

Theo van Breda, CEO of Mondi Packaging South Africa said, "Mondi Packaging South Africa, a black empowered company, is committed to growing its presence in South Africa.  The acquisition of Lenco fits its strategy to grow and diversify into the plastic packaging sector in a focused and meaningful way.  It is complementary to the smaller acquisition of 51% of the rigid plastic business bought from Linpac in 2006. This acquisition will see the company become a significant player in the rigid plastic sector in South Africa and enable the company to offer a more complete packaging solution to a materially common customer base."

John van Wyk, partner at Actis, said, "This exit is in line with Actis's strategy to invest over the medium term in strong local businesses with experienced management teams. The sale to Mondi Packaging South Africa will support the continued development of the business."

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