Aveng’s U-turn: McConnell Dowell stays in the stable while Moolmans sale drags on

Key topics:

• Aveng halts McConnell Dowell separation, keeping core business intact

• Moolmans sale continues amid new MD appointment to steer operations

• Shares down 63% YTD; investors face potential value trap or opportunity

Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.

Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.

If you prefer WhatsApp for updates, sign up to the BizNews channel here.

BizNews Reporter

For the long-suffering shareholders of Aveng, the promise of "value unlock" has been the carrot dangling just out of reach for the better part of a decade. 

The markets have lost patience with these promises. Aveng shares are down 63% year to date and are not far off being a negative ten bagger in the past four years (they have lost 85%). 

The strategy, we were told, was clear: simplify, sell off non-core assets, and eventually separate the jewel in the crown—Australian infrastructure giant McConnell Dowell—to let it fly free of its South African legacy discount.

Now, in a trading update released today, the Aveng Board has effectively pulled the handbrake on that plan.

After a "thorough investigation" into separating McConnell Dowell—a move many punters had baked into their valuation models—the company has concluded that the best way to extract value "at this juncture" is to keep the business exactly where it is.

Read more:

It is a significant strategic pivot. For years, the narrative has been about the break-up. Now, it seems, the sum of the parts is worth less than the whole—or at least, the cost of separation is currently too high a price to pay.

The Jewel stays put

On paper, the logic for retaining McConnell Dowell is becoming harder to argue against, especially given the current volatility in global construction markets. The subsidiary is the group’s engine room, and today’s update confirms it remains healthy.

The division has secured new work in excess of A$1.2 billion (R14.5 billion) in the current financial year. Perhaps more significantly, it holds "preferred bidder" status on another A$1.2 billion worth of contracts. In an industry where the order book is everything, these are comforting numbers.

By retaining McConnell Dowell, Aveng keeps its primary revenue generator and profit driver. The focus now shifts back to "improving operational performance" and "profitability"—corporate speak for "let's make money instead of just structuring deals."

The Moolmans Saga

While the Australian construction business is staying put, the “for sale” board is firmly up on Aveng’s South African mining contractor, Moolmans.

The update on Moolmans reads like a sequel to a movie we’ve all seen before. 

Negotiations are "continuing" with a preferred party. Due diligence is "detailed." Negotiations are "extended."

It is a frustration for investors who have watched the mining contractor struggle with operational challenges and contract losses in recent years. 

However, there is a twist in the tale. Aveng has appointed a new Managing Director for the unit—Pieter van Greunen, a veteran with 35 years of mining experience.

Van Greunen spent most of the last seven years at the SA operations of Vedanta Resources. A mechanical engineering graduate from Tukkies, the first decade and a half of his career was spent at Anglo American and De Beers.  

The appointment of a heavy hitter like Van Greunen "with immediate effect" sends a mixed signal. 

Is he there to hand over the keys to a new owner, or is he being brought in to fix a business that might be on the books for longer than anticipated? The departure of outgoing MD Rod Dixon suggests a clean slate is needed, regardless of who owns the asset next month.

The Value Trap?

The market’s reaction will be telling. Aveng’s share price has taken a mauling over the last 12 months, shedding nearly 60% of its value as the "break-up premium" evaporated and operational losses in FY2025 weighed on sentiment.

With a market cap of just over R600 million, Aveng is trading at a fraction of its revenue—a classic value trap, or perhaps, a deep value opportunity for the brave.

Read more:

The decision to keep McConnell Dowell removes the immediate prospect of a liquidity event (like an unbundling or separate listing) that many were banking on. Instead, shareholders are being asked to trust that the current structure—managed largely from Australia by CEO Scott Cummins—can deliver organic growth that the market will eventually recognise.

The Bottom Line

The Board says it expects to release reviewed results for the six months ending 31 December 2025 on or about 24 February 2026.

Until then, investors are left with a new reality: The great Aveng break-up is on hold. The company is betting that a profitable, integrated McConnell Dowell is worth more to them than a spun-off one. As for Moolmans, the "For Sale" sign is fading in the sun, but perhaps Mr. Van Greunen can apply a fresh coat of paint.

For the faithful who have held on this long, the wait for the payday continues.