Esorfranki builds on WBHO model

Johannesburg - The geotechnical and engineering firm Esorfranki, which moved from AltX to the JSE's main board on Thursday, hopes to emulate construction giant Wilson Bayly Holmes-Ovcon. It emerged on Friday that the group earlier approached WBHO about a possible takeover of the smaller company.

WBHO chairperson and ex-CEO Mike Wylie confirmed on Friday that WBHO was approached by Esorfranki.

"We were going to buy them, but they were too specialised. (They were) a geotechnical firm, so we didn't go ahead," said Wylie.

However, Esorfranki in recent months expanded its services to encompass civil engineering construction.

The group acquired civil engineering groups Patula and Shearwater in October for R345m and R166m respectively.

Recently, Esorfranki CEO Bernie Krone said the company hopes to emulate the WBHO model. The group aims to structure its subsidiaries and divisions on WBHO's "good" model.

A fund manager welcomed Esorfranki 's approach, saying WBHO was the "better" and "more consistent" construction player of the top four, which includes Aveng, Murray & Roberts and Group Five.

Esorfranki 's move to the JSE main board on Thursday has also evidently paid off, with its share price up almost 6% since the listing.

Krone said there has been growing encouragement from the investor community to make the leap, which would allow the share performance to align more closely with market confidence in the construction sector.

"The JSE main board is the appropriate platform for growth at this time in the group's lifecycle," he said.

He said the group has had "significant" organic and acquisitive growth since listing on AltX three years ago, adding that it experienced growth in revenue from R100m on listing in 2006 to R1.4bn at February 2009.

Krone said he remains confident about Esorfranki's prospects, despite the economic downturn.

"South Africa, while not having escaped recession, has certainly been less affected than the USA and Europe," he said, referring to the 9% growth in the domestic construction industry for the first quarter of 2009.

"Although times are tough in the country, the construction industry in which Esorfranki operates is still robust relative to the last five years. Notwithstanding this, the current slowdown is an expected and welcome opportunity to take stock and consolidate for growth in the recovery that will again yield a work surplus."

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