Sanlam Investments Private Equity takes majority stake in Danny’s Auto

Private Equity (SPE), the private equity division of Sanlam Investments, recently announced that it has acquired a majority stake in Danny’s Auto Body Parts (Danny’s Auto), a provider of a wide range of high quality aftermarket automotive parts and accessories for various vehicle types and models in South Africa and other sub-Saharan countries. SPE made the acquisition through its private equity fund, SPE Mid-Market Fund I and aims to make a significant impact on job creation and support the democratisation of vehicle repairs and maintenance.

Based in Springfield, Gauteng, Danny’s Auto has a 76-year track record as a successful wholesaler of aftermarket automotive parts and spares, and now developing products under its own brand, including Imoto Chemicals. Through an extensive range of over 30 000 stock items and strategic partnerships with leading brands such as Dunlop, Lucas Automotive and FIAMM Energy Technology, Danny’s Auto has built a strong reputation as a trusted supplier to wholesalers and automotive retail outlets.

Paul Moeketsi, managing partner at SPE, says, “We are excited to announce our investment in Danny’s Auto. This strategic move aligns with our investment strategy of supporting established businesses with strong growth potential. We believe that our partnership with Danny’s Auto will create significant value and contribute to the continued success of the company and positively impact the business and the industry.”

He explains the deal has been made at a time of exceptional growth opportunities in the automotive aftermarket industry, “The need for mobility has reverted to pre-Covid levels. However, the pandemic and economic downturn means the new car market has slowed, with local vehicle production being geared towards export markets and people owning cars for longer, which increases the demand and frequency for aftermarket vehicle repairs and maintenance. Coupled with this, the Competition Commission’s introduction of the right-to-repair guidelines will see the removal of restrictions imposed by original equipment manufacturers (OEM) regarding service providers and replacement parts for under-warranty vehicles. The new guidelines allow car owners to choose an independent service provider for repairs and maintenance without automatically losing warranty coverage.”

The guidelines align with global trends of deregulating the automotive industry to provide consumers with greater flexibility to repair and service their vehicles, sparking increased demand for aftermarket service providers. “With its existing scale and brand quality, Danny’s Auto is well positioned to capitalise on this opportunity through its established network and extensive access to a wide range of affordable international automotive content.”

Gift Pule, principal at SPE, says the deal will also deliver strongly on Sanlam Investments’ commitment to investing for impact. “The business is poised for significant growth over the next five years and is expected to grow direct employment by between 16% and 26%. Beyond the direct employment growth, significant upstream value chain jobs and an estimated 300 downstream jobs in the wholesale, retail and vehicle repair markets are expected to be supported within the next five years.”

Pule says this relative job growth in direct positions, the downstream value chain employment and enabling the democratisation of vehicle repairs and maintenance, highlights the substantial impact of this investment on the automotive industry and local communities.

Danny’s Auto also supports over 3 400 mostly owner-managed wholesalers, retailers and parts shops, predominantly located in lower LSM communities. Through its extensive supply chain, strategic relationships with international brands and knowledge of the local car parts, Danny’s Auto provides its customers access to affordable, OEM-quality aftermarket parts and spares, which directly helps the sustainability of local enterprises and contributes to economic growth in these communities.

Ahmed Ismail, CEO of Danny’s Auto, expressed his enthusiasm about the investment, stating, “We are thrilled to have Sanlam Private Equity as our partner. Their expertise, network, and financial support will empower us to capitalise on new growth opportunities, expand our product offering and markets, and further strengthen our competitive position in the industry. This investment marks an important milestone for Danny’s Auto and we look forward to a fruitful collaboration.”

This investment becomes the fifth deal by SPE Mid-Market Fund I and follows the success stories of  Cavalier Group, the Absolute Pets retail chain, Q Link, a fin-tech provider of payment application software and SkipWaste, an integrated waste management and alternative disposal business.

CIS disclosure

Sanlam Investments consists of the following authorised Financial Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF) (Pty) Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Satrix Investments (Pty) Ltd, Amplify Investment Partners (Pty) Ltd (“Amplify”), Sanlam Africa Real Estate Advisor Pty Ltd (“SAREA”), Simeka Wealth (Pty) Ltd, Absa Asset Management (Pty) Ltd (“ABAM”) and Absa Alternative Asset Management (Pty) Ltd (“AAM”); and has the following approved Management Companies under the Collective Investment Schemes Control Act: Sanlam Collective Investments (RF) (Pty) Ltd (“SCI”), Satrix Managers (RF) (Pty) Ltd (“Satrix”) and Absa Fund Managers (RF) (Pty) Ltd. Sanlam is a full member of ASISA. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments/collective investment units/unit trusts may go down as well as up.

Although all reasonable steps have been taken to ensure the information in this document is accurate, Sanlam Investment Management (Pty) Ltd does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document. No member of Sanlam gives any representation, warranty or undertaking, nor accepts any responsibility or liability as to the accuracy of any of this information. This document is intended for information purposes only and the information in it does not constitute financial advice as contemplated in terms of the FAIS Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision. Past performance is not a guide to future performance. Changes in currency rates of exchange may cause the value of your investment to fluctuate. The value of investments and income may vary and are not guaranteed.