ACTOM has received approval from South Africa’s Competition Commission and Competition Tribunal to acquire the assets of transformer manufacturer SGB-SMIT Power Matla. The transaction, for an undisclosed amount, positions ACTOM as Africa’s largest transformer manufacturer.
For the first time, ACTOM will be able to produce Class 3 transformers of up to 500 MVA/400 kV. Until now, the company manufactured only Class 0, 1 and 2 transformers. With SGB-SMIT Power Matla’s assets, ACTOM becomes the only African company able to manufacture large-scale Class 3 transformers.
SGB-SMIT Power Matla was placed under business rescue on September 27, 2023 after years of operational and financial pressures, largely tied to its reliance on Eskom as a primary client.
According to business rescue practitioners Warren Castle and Ian Fleming of Engaged Business Turnaround, SGB-SMIT Power Matla’s Cape Town facility lost its main Eskom contract for small and medium distribution transformers in 2018, followed by a sharp decline in mini-substation volumes in 2019. In January 2021, the company accepted unsustainable pricing on a four-year frame contract. Later that year, a fire at its Pretoria factory destroyed the large and medium transformer production lines, leaving it unable to meet order commitments.
ACTOM CEO Mervyn Naidoo said the acquisition was driven by Africa’s growing energy and infrastructure needs.
“We see rising demand for transformer capacity across the continent, driven by population growth and the resultant need for infrastructure. Multinational OEMs have generally avoided setting up manufacturing operations in Africa, which has left the continent with limited transformer manufacturing capacity. This gap was a key driver of our acquisition,” he said.
The purchase creates the opportunity to strengthen regional supply chains and position ACTOM as a leading African OEM with industrial hubs on the continent producing and supporting products locally, added Naidoo.
He also pointed to broader economic implications: “Infrastructure demand must be used as a lever for industrialisation. Manufacturing is a key sustainable path to meaningful economic growth. When China achieved double-digit GDP growth, manufacturing was the central driver. South Africa must take a similar approach if it is to address unemployment and low growth.”
The acquisition includes SGB-SMIT Power Matla’s two factories in Pretoria and Cape Town, which have both been largely dormant since late 2023. ACTOM will fund the purchase through its balance sheet and has committed additional capital expenditure to restore the facilities.
“Our immediate priority is to ensure compliance, recommissioning the facilities to pre-fire standards, bringing laid-off staff back into the business and rebuilding the order book so that production can resume,” Naidoo said.
The transaction comes at a critical moment, aligning with South Africa’s Transmission Development Plan, which sets out the construction of approximately 15 000 km of new transmission lines and 170 substations over the next decade. “Demand for transformers is set to grow substantially. This acquisition ensures we can meet that demand locally, reduce reliance on imports and support industrialisation and job creation,” Naidoo said.
