Johannesburg, 6 December 2021: Ethos Fund VI is pleased to announce that it has entered into a sale agreement in respect of leading paper and packaging supplier Neopak Holdings with the Corruseal Group.
The Corruseal Group, which is 100% black-owned, intends to acquire 100% of Neopak Holdings (with revenues of c.R1.1 billion). Neopak’s business focuses exclusively on the manufacturing of high-quality recycled containerboard and related paper products via its paper mill operations in Rosslyn and recycling operations in Amalgam.
For over 40 years, Corruseal has been a pioneering manufacturer and supplier of packaging. With over 14 companies in the Group, Corruseal has a national footprint, becoming one of the leading manufacturers and suppliers of packaging to the South African market. The business employs approximately 1,500 people across seven provinces, and operates across recycling, paper, packaging and value-added market segments. Corruseal’s performance corrugated products (using both virgin and recycled paper) are supplied to the perishable and non-perishable foods and beverages, homecare, automotive, general trade and the agricultural markets.
The transaction positions the company to maintain its impressive growth rate in the South African paper and packaging market, which is expected to grow at a compound annual growth rate of around 5% over the next five years. The recycled paper market is enabled through the efficient collection of wastepaper fibre. According to RecyclePaperZA, the country’s paper recycling association, South Africa’s recycling efforts have prevented around 19 million tonnes of paper being sent to landfills in the last 15 years. In 2020, South Africa saw recycling of 1.1 million tonnes of paper and paper packaging. This put the country’s most recent paper recovery rate at 73%, up from 68.5% in 2019. Completion of the transaction is subject to certain customary conditions, including regulatory approvals, which are expected to be obtained in the first half of 2022.
Rand Merchant Bank, a division of FirstRand Bank Limited, acted as financial adviser and debt funder to Corruseal, while Bowman Gilfillan and Werksmans acted as legal advisers to Corruseal. Webber Wentzel acted as legal adviser to Neopak and Ethos.
Michael Jensen (Ethos partner): “Neopak was acquired out of Nampak in 2015, and over the last few years has been strategically re-positioned to create value. The level of unsolicited interest we have seen from potential buyers serves as a strong endorsement of the attractiveness of the business, and what the management team has achieved in the last few years.”
Hamish Fraser (Neopak CEO): “The Neopak business (previously Nampak Corrugated) has delivered strong improvements in operational and financial performance over the last few years. The acquisition by the Corruseal Group will help us to maximise shared benefits for all stakeholders, whilst ensuring the long-term sustainability of our business in a highly competitive industry.”
Mehul Mehta (Corruseal Joint-CEO): “For over 40 years, Corruseal has been a pioneering manufacturer and supplier of packaging. The acquisition of Neopak is an important step in Corruseal’s ongoing growth. This is a strategically significant investment for us, and reaffirms our continued confidence in the South African economy and its people. We are also very excited about the addition of the Neopak team and the opportunities this presents for shared learning. We would like to thank our in-house team and external advisers for helping us reach this important milestone.”