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SPE Takes Stake in Danny’s Auto

Staff writer
July 31, 2023, 5:11 p.m.

Word count: 643

Sanlam Private Equity (SPE) has acquired a majority stake in Danny’s Auto Body Parts, 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.

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Sanlam Private Equity (SPE) has acquired a majority stake in Danny’s Auto Body Parts, 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, said: "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 said 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, said 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 said 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 parc, 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.”

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