Danish valve group takes majority stake in South African valve manufacturer, creating 80 jobs
AVK, a Danish valve manufacturer, has bought a majority stake in South Africa’s Premier Valves Group (PVG) for R100m ($6.5m), enabling its AVK SA subsidiary to be compliant with a new South African law requiring state-owned companies to buy domestically made products with 70% local content.
PVG’s existing factory in Alrode, Johannesburg, will be upgraded with new machines, facilities and buildings, creating 80 new jobs. AVK would also set up a state-of-the-art resilient seal valve manufacturing unit at the Alrode plant producing up to 80,000 products a year.
AVK has valve manufacturing operations in nine countries. It has annual turnover of about R6.4bn ($420m), deriving income from 80 countries.
AVK Holding Southern Africa director Tjaart van der Walt said: "AVK is committed to making a substantive phased investment in commencing local manufacture of its range of world-class valves and flow-control fittings and, at the same time, expanding the manufacturing capacity of PVG’s products,"
Mr van der Walt said the Danish acquisition represented a "substantial, confidence-boosting, inward investment" by one of the world’s leading valve manufacturers. Such products are used in the water, sewage, mining, pulp and paper, and oil and gas sectors.
PVG is one of South Africa’s biggest valve manufacturers, supplying power stations and water infrastructure projects. But before the designation of valves for local content, cheap imports from China had forced the company to downsize and import valves to survive.
The group was now rebuilding its manufacturing capacity. The two companies’ range of products would continue to be marketed under their own brands, and would work closely together to expand the overall position of AVK in the southern African market.
Increased local production as a result of AVK’s investment was estimated to have a sales value of up to R400m a year. This was the value of import substitution plus additional exports delivered through AVK’s international sales network.