AVENG has short-listed three potential black empowerment partners in what could lead to the largest equity transaction in the construction sector to date.

The group, with annual revenue of about R13bn, would not disclose details of the mooted deal yesterday as talks with the potential partners were at an early stage.

Aveng CEO Carl Grim declined to elaborate on the size of the stake being negotiated or the identity of candidates on the short list.

He said only that these were not the high-profile individuals who had repeatedly been involved in the spate of empowerment deals recently.

Empowerdex says SA's 16 listed construction and related companies have annual revenues worth about R40bn with a market capitalisation of R15bn.

The news comes ahead of an expected scramble for black empowerment partners in the sector, which has lagged several other large sectors in empowerment progress.

A construction empowerment charter is expected to start taking shape this year.

Grim said yesterday he did not expect the empowerment charter to be completed within the next nine to 12 months, however.

Almost all the large listed construction companies in SA have yet to find black equity partners.

A recent survey by Empowerdex of the 16 listed construction firms shows that the sector has an overall black economic empowerment ownership ratio of 4,9%.

There are no black executive directors in the sector, but there are nine nonexecutive directors.

Members of the industry say they have fallen behind sectors such as financial services and information technology mainly because these other industries were regarded as "more lucrative or more glamorous" by black investors.

Murray & Roberts, the second largest construction group in SA after Aveng, said yesterday it was fairly advanced in its progress on black empowerment , but would not say whether this applied to equity.

Murray & Roberts commercial director Millard Arnold said only that the process was highly sensitive "in terms of the individuals and organisations we're talking to".

Construction group Wilson Bayly Holmes-Ovcon said it was expecting its first proposal from a potential black equity partner soon. Financial director Angus MacKenzie suggested that the company was looking to sell a fairly small stake initially and increase this over time.

MacKenzie said that the construction charter would provide certainty as to what was expected of companies in the industry. He expected the charter to be completed early next year.

Concor said it was "in the process of negotiations".

Group Five could not be reached for comment yesterday.

Grim said Aveng's priority was structuring a deal that would not diminish shareholder value in any way.

He said finding a partner that could add value was far more beneficial to his company in the longer term than simply finding a partner that was able to raise the necessary funds immediately.

Apr 30 2004 07:12:45:000AM Carli Lourens Business Day 1st Edition