Jonathan Rosenthal/JOHANNESBURG

South Africa is to partially privatise Denel, the state-owned defence group, by the middle of next year, according to public enterprises minister Stella Sigcau.

The government has begun looking for an equity partner for Denel's aerospace division, and Sigcau says British Aerospace would be the first company it will approach for proposals.

The South African government is believed to be planning to sell 30% of the aerospace business, which includes Denel Aviation and Kentron, the missile, unmanned air vehicles, avionics and electro-optical business, to the strategic partner.

British Aerospace already has deepening ties with Denel through existing co-operative agreements, including joint work on the Saab/BAe Gripen light fighter and joint marketing of Denel's Rooivalk attack helicopter in the Australian market.

Sigcau says Denel will be restructured from its current 18 divisions into four units covering heavy ordnance, light ordnance, commercial and aerospace divisions. Booz Allen has been appointed as consultant to conduct a strategic audit of Denel Aerospace and was due to start work on 24 November.

Denel, beset by a slow-down of business on the domestic and international fronts, is expected to report losses of up to R400 million ($70.5 million) for the latest financial year.

Industrial participation work on the Gripen, Hawk and Agusta 109 programmes is expected to start reversing the losses next year.

Source: Flight International