Chairman and founder Quentin van Breda explained that the company has been working at capacity, and needs an injection of capital to allow it to increase its fleet size and meet demand: “At present the company is turning away around 20% of business as we do not have the inventory to fulfil the number of orders. ZAR50m will go some way towards securing preferable credit terms for larger bulk orders from our key suppliers.”

SA French’s directors are currently involved in a pre-listing private placement of 50m shares at ZAR1 a share. A limited ZAR10m vendor placement will complete the private placement. Following the pre-listing private placement SA French is expected to list with a market capitalisation of approximately ZAR165m.”

Revenue is forecast to swell from ZAR120.9m to ZAR190.5m by 2008 with net profit of ZAR12.6m forecast to increase to ZAR21.8m. Van Breda is confident the company will achieve the forecast growth with current orders in hand of ZAR80m, and a further secured project pipeline of ZAR70m.

Sales of tower cranes generate the lion’s share of revenue and are largely repeat business from an established client base that replaces obsolete cranes with new models as well as expands fleets. Van Breda believes these sales are set to increase exponentially. “Most tower cranes in South Africa at present are 25 years or older and the average life expectancy of a tower crane is only 25 years. Construction and engineering houses must seek to upgrade on average at least 5 large tower cranes per year to maintain their fleets at an average cost of ZAR5m per crane, which bodes well for growth at SA French.”

As well as increasing the company’s fleet size, Breda said that it would be moving increasingly into rental, as well as sales: ”The construction boom has led to construction leaders undertaking projects worth more than R100 million, leaving second tier construction companies to complete the balance. These smaller construction companies do not own fleets of equipment and are under pressure to start building these quickly to meet their commitments, often through rental rather than outright purchase due to capital constraints, which will be a key focus area for SA French going forward.”

SA French also plans to use the listing to expand its geographical footprint into sub-equatorial Africa. “All of our supply agreements cover sub-equatorial Africa and we plan to leverage existing relationships with blue chip clients as they expand into the region to further establish our presence there,” said van Breda.