South Africa’s State-owned Industrial Development Corporation (IDC) announced on Monday that the restructuring of its steel subsidiary Scaw Metals into three standalone entities was at an advanced stage, as were plans to secure strategic equity partners (SEPs) for each of the units.

Speaking at the IDC’s results presentation in Polokwane, Limpopo, CEO Geoffrey Qhena indicated that the ‘end state’ for Scaw had been determined and that transactions were currently being finalised, which would enable the development financier to dilute its shareholding in the business.

The IDC announced in 2016 that it had initiated a process to seek an SEP for Scaw, which it argued was not sustainable in its current form.

The IDC had already reached an agreement with Barnes Southern Palace (BSP) to buy into Scaw’s rolled products and wire rod products businesses, which employ more than half of Scaw’s 3 500 workforce.

The proposed merger had also been lodged before the Competition Commission for its approval.

BSP is made up of the Barnes Group, which has significant industrial interests in South Africa, and Southern Palace, a black-owned and managed diversified industrial holding company that is already one of Scaw’s empowerment partners.

It is understood that BSP will acquire a controlling interest in Scaw’s rolled products and wire rod units, but that the IDC will remain a significant shareholder in the unbundled business.

Discussions with two other SEPs for Scaw’s grinding media and cast products divisions respectively were also at an advanced stage, with Qhena indicating that the competition authorities would be notified about these transactions in the not-too-distant future.

In fact, he indicated that, all going to plan, all three transactions should be finalised by year-end.

The Scaw group reported a R787-million loss in 2017, having recorded losses of R1-billion in 2016. The IDC, meanwhile, reported a R2.2-billion profit for the year, up from R223-million in the previous year.