SOUTH AFRICA – Paper and plastics packaging and recycling company Mpact has acquired a strategic equity shareholding in Africa Tanks, a manufacturer of vertical tanks.
This move aims to address drought, water shortages, and deteriorating infrastructure.
“The broader infrastructure and related water supply challenges are likely to persist for several years, and demand for water storage and rainwater harvesting is expected to continue growing,” says Mpact CEO Bruce Strong.
The equity investment accelerates Africa Tanks’ growth and expansion into the Eastern and Western Cape. Founded in 2017 in Cullinan, Gauteng, Africa Tanks will now have the capital required to achieve economies of scale and become a national supplier.
The percentage of households with piped water experiencing interruptions lasting more than two days at a time, or 15 days over a year, increased to 35.8% in 2023 from 24.3% in 2012.
Many households without access to piped water rely on periodic deliveries by tanker.
“We aim to invest in growth markets that meet vital needs. South Africa is a dry country, with an average rainfall of 465 mm a year, and inadequate water infrastructure. People in many cities, towns, and regions face ongoing water supply challenges,” Strong explains.
He adds, “Just as loadshedding drove the rapid adoption of electricity self-generation, we foresee a large and rapidly growing market for high-quality water tanks as households and institutions invest in water security to ensure continuity of supply.”
Water shortages linked to the power crisis or adverse weather events have increased over the past few years. Additionally, the Green and Blue Drop reports show a decline in water quality due to contamination by sewage and bacteria, leading to waterborne diseases.
“Water supply is increasingly uncertain owing to a combination of factors, including deteriorating infrastructure, environmental degradation, persistent droughts, and disparities in water and sanitation access. Therefore, there is a need for reliable water storage that meets strict safety and hygiene standards,” says Africa Tanks director Craig Forbes.
Africa Tanks uses state-of-the-art extrusion blow molding technology to manufacture three-layer tanks efficiently.
“Having Mpact as an equity partner gives us the necessary capital to expand the business and address the urgent need for safe and reliable water storage solutions across Southern Africa, as well as the opportunity to leverage Mpact’s technology, expertise, and national footprint,” Forbes adds.
Mpact’s vision is to build a sustainable business that contributes to society through innovation and investments in businesses that respond to societal needs.
“Our investment in Africa Tanks aligns with our strategy to pivot towards a circular economy while investing in areas where significant opportunities for growth and innovation exist,” Strong notes.
Meanwhile, Mpact has agreed to sell its Versapak business, a manufacturer of styrene and polyethylene terephthalate products, to Greenpath Recycling for R267 million.
Greenpath is a wholly-owned subsidiary of plastic packaging products manufacturer Sinica. Versapak had a net asset value of R239 million (US$13.06m) and posted profits before tax of R175 million (US$9.57m) for the financial year ended December 31, 2023.
Following a strategic review in 2021, Mpact decided to sell Versapak as part of its ongoing portfolio optimization plan.
The rationale for the decision was that Versapak’s products are not fully aligned with Mpact’s strategy. The sale is conditional on approval by competition authorities, and Mpact anticipates the effective date to be in the fourth quarter of this year.
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