Majority shareholder Super Group will need shareholder approval for its proposed disposal of its 53.58% stake in Australian provider of integrated mobility solutions company SG Fleet. Australian private equity firm, Pacific Equity Partners, has announced terms of the acquisition of 100% of SG Fleet by way of a scheme of arrangement for a cash consideration of A$3.50 pr share. The offer price represents a 31% premium to the closing price on 22 November 2024, the date prior to the SENS and ASX announcements. Super Group will dispose of its stake for A$641,4 million (c.R7,53 billion). After settling up to R1,96 billion in SA debt, the remaining proceeds will be returned to shareholders by way of a special distribution of R16.30 per share. The effective date of the proposed transaction is expected to occur in March 2025.
Numeral (formerly Go Life International) is to acquire an effective 51% stake in Longevity Lab for an undisclosed cash sum. Longevity is a biotechnology business specialising in creating and managing wellness clinics and holistic wellness programmes which incorporate nurse and doctor administered stem cell and cellular optimisation medical treatments. The deal is in line with Numeral’s strategy of building a fully vertically integrated biotechnology group.
Aveng Africa (Aveng) has disposed of a 30% stake in Dimopoint to Collins Property Group for R96 million which will be settled in cash. Following the completion of the transaction, Collins will directly hold 100% of the property holding and investment company. The deal will result in the termination of the head lease agreement between Aveng Africa and Dimopoint. The deal is cash accretive and will improve earnings before tax by R82 million.
In a new empowerment transaction announced by Nampak, it will partner with Cambrian Capital Partners who will manage a private equity fund which will seek investments in B-BBEE private equity opportunities. The intra-group transaction will enable the Fund to acquire a 15% stake in Nampak Products at nominal value without the need to raise acquisition funding. Nampak Intermediate Holdings (NIH) will hold the remaining 85%. As the limited partner to the Fund, NIH will provide committed capital of up to R12,5 million over the life of the Fund. The transaction is a category 2 transaction and as such does not require shareholder approval.
The proposed reverse takeover of Kibo Energy by ESTGI AG announced in September 2024 has been terminated. According to the announcement sent out by Kibo, there is insufficient time available to secure all relevant information in a timely manner necessary to complete the takeover particularly given that the company has been suspended for almost six months. Rather, it said, focus would be on publishing outstanding audited accounts to enable the lifting of its suspension on AIM and the JSE.
The R160 million disposal by Transaction Capital of 100% of RC Value Added Services to SA Taxi Holdings (SATH), announced in late September is taking longer than initially anticipated. The Extended Commitment Negotiations Long Stop Date has again been extended, this time to 13 December 2024. Failing a conclusion, the parties may opt to restore their position to that prior to the implementation of the deal.
Mantengu Mining has received Competition Commission approval for its acquisition of Sublime Technologies from Sintex Minerals and Services. Sublime is the only Silicon Carbide producer in Africa and currently accounts for c.2% of the global market share.
Suspensive conditions of Trematon Capital Investments’ disposal of a 60% shareholding in Aria Property Group, a portfolio of 13 properties, have been fulfilled. The cash consideration of R293 million in respect of the disposal is expected to be paid on 2 January 2025.
Unlisted Companies
Etana Energy, a majority black-owned South African energy trading company supplying electricity generated by renewable energy projects to businesses, is to receive US$100 million in default guarantee finance. GuarantCo, part of the Private Infrastructure Development Group and British International Investment, the UK’s development finance institution and impact investor, will each provide $50 million in a deal designed to boost South Africa’s green energy transition. The guarantee facility will enable around 500MW to be added to the grid by several renewable energy (wind and solar) independent power producers over the next few years.
UK growth capital investor Salt Capital has acquired a strategic stake in Pirtek Africa for an undisclosed sum. Established in 1999, the company’s core business revolves around the supply and maintenance of hydraulic and industrial hoses, fittings and related products catering to a wide range of industries. Pirtek Africa owns the master franchise rights to supply and distribute the Pirtek branded fluid transfer solutions offering for the African continent with a presence in eight countries.
As part of the conditions set by National Treasury for Eskom to qualify for its R254 billion debt relief package, Eskom has announced the sale of its home loan company, which is housed in Eskom Finance Company SOC, and its interests in Nqaba Finance 1 (RF). The sale, to African Bank, is expected to conclude by 31 May 2025.
Following the results of the scrip dividend election, Redefine Properties will issue 150,180,791 new ordinary shares in the company in lieu of a final cash dividend, resulting in a capitalisation of the distributable retained profits in the company of R668,31 million.
The board of Zeder Investments has approved a further special dividend of 11 cents per share to shareholders amounting to R169,4 million. This follows the dividend received by Zeder from the sale of Novo Fruit Packers by Capespan Agri.
Mantengu Mining has issued and will list, 15,933,813 shares on the JSE in terms of its R500 million drawdown facility announced in April this year.
Shareholders voted in favour of the buyout offer from Sasfin to acquire up to 10% of the company’s shares. With shareholders holding a collective 28,96 million shares representing 90.14% of the shares in issue having provided irrevocable undertakings not to accept the offer, and so remain invested in an unlisted company, Sasfin is expected to delist on 30 December 2024.
EOH will trade under its new name iOCO and JSE share code IOC, with effect from Wednesday 11 December 2024.
The JSE has approved the transfer of the listings of Rex Trueform and African and Overseas Enterprises to the General Segment of Main Board with effect from commencement of trade on 2 December 2024. Crookes Brothers and Sebata followed suit on 4 and 5 December 2024 respectively. The listing requirements in this segment are less onerous for the smaller cap firms.
In its Quarterly Report, suspended Salungano has advised shareholders that it intends to release the FY2024 financial results around 31 March 2025 and the FY2025 interim results shortly thereafter. Given this, the company estimates that its suspension on the JSE will be lifted around mid-April 2025.
This week the following companies repurchased shares:
In October, Anheuser-Busch InBev announced a US$2 billion share buy-back programme to be executed within the next 12 months which will result in the repurchase of c.31,7 million shares. The shares acquired will be kept as treasury shares to fulfil future share delivery commitments under the group’s stock ownership plans. During the period 25 – 29, November 2024, the group repurchased 405,708 shares for €21,04 million.
Hammerson plc continued with its programme to purchase its ordinary shares up to a maximum consideration of £140 million. The sole purpose of the buyback programme is to reduce the company’s share capital. This week the company repurchased 531,166 shares at an average price per share of 292 pence.
South32 announced in its annual financial statements released in August that it would increase its capital management programme by US$200 million, to be returned via an on-market share buy-back. This week 541,992 shares were repurchased at an aggregate cost of A$2,02 million.
In line with its share buyback programme announced in March, British American Tobacco this week repurchased a further 286 020 shares at an average price of £29.67 per share for an aggregate £8,49 million.
In the six months to end September 2024, Prosus and Naspers repurchased 92,689,659 (US$3,3 billion) and 7,037,420 ($1,4 billion) N shares respectively, representing 4% of the outstanding N ordinary shares in issue. During the period 25 – 29, November 2024, a further 2,482,721 Prosus shares were repurchased for an aggregate €94,6 million and a further 207,949 Naspers shares for a total consideration of R1,92 billion.
One company issued a profit warning this week: Labat Africa.
During the week, five companies issued cautionary notices: Conduit Capital, Choppies Enterprises,Super Group, Vukile Property Fund and Transaction Capital.
Early-stage investor, Renew Capital has announced its first investment in Tunisia, backing payment gateway firm Konnect. The platform offers payment links, e-commerce plugins and an API designed to cater to all size businesses.
HUB2, a fintech from the Ivory Coast, has raised US$8,5 million in Series A funding. The round was led by TLcom Capital and included FMO, Enza Capital, Bpifrance, Eric Barbier and other investors. HUB2 aims to become the “Stripe for Francophone Africa”. The company currently operates as the backbone for 55 fintechs across Francophone Africa, including Jaulaya, Onafriq, NALA and CinetPay, by providing payment infrastructure to these firms to power their operations.
Moroccan mobility firm, Enakl, has secured US$1,4 million in pre-seed funding from Catalyst Fund, Renew Capital, Digital Africa, Station F and 15 angel investors. The startup provides sustainable, collective transport solutions tailored to emerging markets.
Nama Ventures, A15, Sanabil 500 Global and some angel investors, have back Egyptian logistics startup Nowlun, to the tune of US$1,7 million in seed funding. The online freight forwarding platform will use the funding for its expansion plans and to further develop its platform.
African Export-Import Bank (Afreximbank) is the mandated lead arranger and lead financier of a historic ammonia and urea fertilizer plant in Angola, promoted by the Grupo Opaia. Afreximbank and other financial institutions will provide US$1,4 billion in debt funding. The plant will have a production capacity of 4,000 metric tonnes per day and will create 4,700 jobs (3,500 during construction and 1,200 permanent positions).
South Africa is not immune to the global mergers and acquisitions (M&A) valuation gap between the price sellers are willing to accept and that which purchasers are willing to pay. In a stretched financing market and a strained broader global economy, one solution to the valuation gap may lie in implementing a contingent value right (CVR).
The boards of target companies and purchasers have long been divided on the appropriate valuation for a takeover of a target company. The target board seeks to maximise shareholder value and will be reluctant to sell in a downcycle when valuations are low, even if the price is reasonable, given the prevailing economic circumstances. The purchaser’s board, on the other hand, will generally be looking to invest against the cycle or to merge for long-term strategic reasons, and is likely to be looking to do so at a time when the lower valuations favour its proposal or strategy. While the purchaser will likely be viewing the acquisition with a longer-term lens, it will nonetheless be concerned with overpaying in the downcycle, especially if the purchaser’s valuation (and cash flow) is also adversely affected by the cycle. The converse is equally true at the upper end of an upcycle (e.g. tech stocks).
When it comes to M&A, this can lead to a marked difference between the purchaser’s and seller’s price expectations, particularly at the deep end of a downcycle or the peak of an upcycle. Looking at the downside case, certain target boards will reject offers that they believe are too low or opportunistic, while purchaser boards may be reluctant to stretch the offer price or even make an offer in these circumstances. Ultimately, the heart of the disconnect between them is that neither party can be exactly certain where in the cycle they are, or how soon and how sharply the cycle will reverse. Each party risks judging this incorrectly, with potentially significant adverse impacts on their respective financial outcomes. Aside from the numbers, there is also the human psychological factor – since criticism outweighs praise, where there is material uncertainty on the merits of a proposal, the natural bias of both boards (but especially the target board) is towards a ‘safe’, status quo decision, which usually favours saying ‘no’ to the deal, rather than ‘yes’.
While various factors contribute to a widening valuation gap, the volatile political and macroeconomic environment in which we find ourselves is a significant factor. With over ten significant elections worldwide in 2024, as well as international upheaval due to ongoing wars in the Middle East and Ukraine, many deals hinge on the outcome of these uncertain geopolitical events.
The same is true for South Africa, where, aside from an uptick in M&A activity in 2021/2022, there has been a significant slowdown in the post-pandemic years. New listings are one measure of market activity and price confidence, commonly reflecting sell-side activity from private equity or a company positioning itself for acquisitive growth (and the corollary for delistings). South Africa has seen both an increase in delistings and a slowdown in new listings, accelerating in 2023 and 2024. On the political front, since the announcement of a Government of National Unity in June, South Africa has seen an uptick in investor confidence, with the JSE All Share Index returning 5.6% in Rand terms and 8.3% in US dollars, comfortably outperforming the S&P 500, the MSCI World Index, and emerging market peers. Yet, this has since slowed as the initial optimism has been tempered by the inevitable, but no less disappointing, teething issues that have emerged.
Considering these prevailing challenges, purchasers and sellers around the world are seeking different M&A strategies or looking to supplement existing approaches. For purchasers, these may include a strategy centred on direct engagement with key target shareholders in formulating their ‘bear hug’ price – an offer to buy a publicly listed company at a premium to ‘fair value’, or avenues such as CVRs to land on a price that will have clear shareholder support. With wide valuation gaps, more innovative deal structures are also being proposed, including the use of CVRs. A CVR is an instrument that commits purchasers to pay a target company’s shareholders additional consideration for their shares based on a future contingency, in addition to the initial baseline purchase price paid to them (reflecting a conservative valuation). As the triggering contingency can be any event, and the resulting consideration is similarly flexible in both amount and nature, CVRs offer the parties a flexible, highly customisable solution to the unknowns and risks contributing to the relevant valuation gap.
CVRs can generally be categorised as either price protection or event-driven mechanisms. Price protection CVRs can be applied in an exchange offer to guarantee or underpin the value of the purchaser’s shares that are issued as acquisition consideration in the transaction. This underpinning can take a variety of forms, including a top-up issue of shares (much like a payment-in-kind loan note), or a special dividend or series of dividends. Event-driven CVRs entail a commitment to pay additional consideration to the target shareholders, depending on the occurrence of future events. Typical examples include a value linked to future profits, the resolution of a material litigation claim, and profits realised from the on-sale of a specific asset or business of the target. The latter can be particularly relevant where the sell-side considers the asset to be significantly more valuable than the valuation attributed by the purchaser (e.g. a project in development) or where the asset is non-core to the purchaser or not one for which it is willing to pay an acquisition premium. The commonality among these scenarios is that the purchaser pays less upfront (and thus lowers the risk of its buy decision), and the seller exits with a reasonable, though not optimal price, but with an upside case should the factors which it feels justify a higher valuation come to pass (and thus lowers the risks of its decision to sell). Similar mechanisms, including earn-outs and/or deferred payment structures, are a staple of private M&A deals.
In some ways, a price protection CVR is similar to a Material Adverse Change (MAC) clause in an M&A deal, but focused on the purchaser and not the target. An event-driven CVR is the inverse of a MAC, with the triggering event being more focused on the upside rather than the downside. A MAC is a contractual mechanism that allows the purchaser to terminate the acquisition agreement and withdraw from the transaction if, before the deal is closed, a material adverse change occurs – one that has a significant, negative effect on the target’s business, assets or profits. A CVR reflects a similar idea, but instead of being a contractual condition that allows the whole deal to collapse, it enables the deal to proceed, but to be adjusted later, based on the relevant event occurring or not occurring.
A CVR can be structured and offered as a listed instrument tradeable on a securities exchange, or on a privately held basis (transferable or non-transferable). A listed CVR allows shareholders who have differing risk or time-value profiles to hold or exit their CVR to match their respective preferences. The value and price of a CVR at any given time will depend on several factors, such as the probability of the event’s occurrence by the expiration date, the remaining time to maturity (and thus payment), the performance and volatility of an underlying asset, and the risks of default and dispute.
While CVRs have increasingly been applied in mid- and small-cap life sciences and healthcare transactions in the United States, they are presently less common in the public M&A market in Europe. Although there has been a recent uptick in CVR negotiations in these markets, few have yet been implemented. We have not yet observed one being used in public transactions in South Africa.
Price considerations aside, a CVR will often also have to address two key considerations. The first is the risk of a dispute arising over whether the trigger event has occurred, or the extent to which it has occurred, and how such a dispute will be resolved. The second consideration is the degree of alignment (or misalignment or indifference) between the occurrence of the future event and the impact such an event will have on the purchaser. An earn-out style provision, for example, likely has a fair degree of alignment between the parties as it represents a win-win scenario for both. On the other hand, the successful resolution of a tax dispute may have no alignment, or even misalignment, between the parties, especially if the base acquisition price is already factored into the worse-case outcome or if the purchaser’s ongoing relationship with tax authorities is placed at risk. In such instances, the CVR will need to include appropriate terms (such as an all-reasonable endeavours undertaking), or a specific mechanism (such as appointing a neutral party to have carriage of the dispute), to address this.
Not only can a CVR be used to bridge a typical buy/sell valuation gap linked to market cycles, but it can also be used to close a deal when the valuation itself has a significant inherent uncertainty or complexity. Some examples of this include where the valuation is significantly influenced by:
the occurrence and value of an anticipated future disposal;
the success of ongoing research and development activities (e.g. a breakthrough medicine at its trial stage);
industry-specific events (e.g. regulatory reviews or approvals);
impending potential legislative changes or the timing and form of their implementation (e.g. National Health Insurance, emission standards, required rehabilitation provisioning); and
unresolved disputes or specific, but difficult to assess or quantify, risks with a wide range of potential outcomes (e.g. class action claims or significant tax disputes).
While, for many market participants, CVRs have mainly been a point of discussion rather than a done deal, increasing examples have been seen through to completion. We believe that a CVR can be an effective alternative mechanism for closing public M&A deals where valuation gaps exist or are dependent on specific, uncertain outcomes. Considering their flexibility, CVRs can be customised to best serve specific requirements of the deal, thereby helping to get more mutually beneficial deals over the line.
Vuyo Xegwana-Bandezi is a Senior Associate and Colin du Toit and Mncedisi Mpungose are Partners | Webber Wentzel
This article first appeared in DealMakers, SA’s quarterly M&A publication.
In the ever-evolving landscape of global trade and geopolitics, private equity (PE) firms are navigating a ‘new normal’ characterised by heightened uncertainties, shifting power dynamics, and an evolving geopolitical landscape, where the traditional norms of trade and investment are being reshaped.
As part of this new reality, emerging markets are becoming ever more important, particularly the countries in the BRICS group (Brazil, Russia, India, China and South Africa).
This ‘new normal’ has introduced opportunities, but also new risks when undertaking investments or managing a global investment portfolio. This means that private equity investors need to keep abreast of issues such as trade wars, sanctions, and regulatory changes that could impact the flow of capital and the stability of their investments.
Through recent analysis, we identified several ways in which recent geopolitical events are affecting the investment landscape; most notably:
Portfolio risk exposure: Among the 20 largest private equity (PE) fund portfolios, an average of 20% of assets are exposed to geopolitical and trade risk. Some funds have even higher exposure.
Due diligence: Individual investment decisions are increasingly subject to geopolitical, as well as economic, considerations.
Areas of risk: Companies face risk exposure in three main areas: cross-border value chains, strategic sectors, and climate regulation and policies.
Consequently, PE firms should adapt by integrating geopolitical risk analysis into their due diligence processes and portfolio investment strategies. This involves a thorough analysis of risk exposure, taking into account specific issues of the geographies, trade flows and sectors concerned.
The BRICS nations have been pivotal in giving the Global South a greater voice in world affairs and challenging the domination of existing institutions. With the potential expansion of the BRICS+ to include emerging economies like Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, the bloc’s influence on global trade and investment strategies is set to increase. While it is too early to tell how this group might develop, this expansion has the potential to establish global institutions parallel to Western-led ones, and to create new opportunities for economic cooperation.
Moreover, this expansion of the BRICS group is part of a wider shift towards a multipolar world, where emerging markets gain a stronger voice and the ability to shape international policies and institutions. This shift necessitates a strategic response from PE firms to capture the opportunities and mitigate the risks associated with a more fragmented and volatile global landscape.
With a changing world order, PE firms need to be agile and innovative. They need to build strong local networks, invest in on-the-ground expertise, and foster relationships with local partners. Additionally, they must embrace environmental, social and governance (ESG) criteria, which are becoming increasingly important to investors and can provide a competitive edge in these markets.
There are three key actions that PE firms can take to mitigate geopolitical risks:
Review overall fund strategy: PE firms should assess their portfolio for geopolitical and trade risk exposure. They need to identify companies that require attention, screen for at-risk industries, and evaluate potential changes in geopolitics, trade and regulations.
Create new portfolio value: While assessing high-risk companies, PE firms should estimate the impact by analysing revenue, cost drivers, value chains and sector exposure. This helps identify value creation levers.
Incorporate geopolitical perspective in due diligence: During due diligence for acquisitions, PE companies should actively apply geopolitical perspectives to assess target attractiveness and market outlook.
While the ‘new normal’ in geopolitics poses significant challenges for private equity firms, it also opens new avenues for growth. By understanding and adapting to the political risks and embracing the opportunities presented by emerging markets – including the expanded BRICS group – private equity firms can position themselves to thrive in this changing landscape.
It is a delicate balance of risk and reward, requiring a strategic approach that is both globally informed and locally attuned.
Lisa Ivers is Managing Director and Senior Partner; Head of Africa, and Tim Figures is a Partner and Associate Director, EU & Global Trade and Investment | Boston Consulting Group
This article first appeared in Catalyst, DealMakers’ quarterly private equity publication.
Global institutional capital is increasingly focused on sustainability, both as an investment opportunity and as part of investment criteria. This is driven by the forecasted (positive and negative) economic impact of the climate change mega-trend, regulation such as the EU’s Carbon Border Adjustment Mechanism, and societal pressure to address unsustainable corporate practices.
Africa presents fertile ground for scalable, high impact Environmental, Social and Governance (ESG) projects and programmes. The continent boasts some of the world’s richest renewable energy generation potential, and many of the resources needed to build green technologies. African countries’ unique developmental journeys also present a wide range of opportunities for corporate supported social interventions to have a real impact.
Sub-Saharan Africa has great potential for investments with material sustainability outcomes, and this is already being realised through higher transaction volumes and values in industries that are enablers of sustainability initiatives, such as renewable energy, copper, and other green tech minerals.
Sustainable, alternative investments are another key opportunity, with major African bourses listing green and sustainability linked bonds for several years, and the Johannesburg Stock Exchange’s (JSE) Socially Responsible Investment (SRI) index’s continuous innovation. Social impact investments by corporates are also on the rise, with the recognition that when properly designed and implemented, these projects and programs can have an exponential impact on an organisation’s sustainability credentials and, most importantly, the lived reality of the participants.
The sub-Saharan Africa region is witnessing a surge in ESG-focused investments, catalysed by an increasing awareness of, and appetite to pursue, the opportunities presented by sustainable investment in Africa. The importance of leveraging ESG for economic development has been recognised, not only in market led initiatives such as green finance and sustainable investment strategies, but also in state-led, multilateral initiatives like the African Union’s Agenda 2063. The market is seeing an increasing trend towards factors within the sustainability / ESG stable becoming central in large transactions. Capital is being directed towards value chains set to benefit from sustainability driven changes, like the electric vehicle value chain. Companies are driven to integrate ESG practices, not only to ensure continued social and regulatory license to trade, but as a strategic imperative to attract investment. Africa is well-positioned to attract large investments into its strategic sectors, and presents an opportunity for multinationals and other corporates to make investments that will have an exponential impact on their sustainability scorecard.
Climate change and increased scrutiny of corporates’ sustainability practices by the public and regulators has driven ESG high up the agenda of many institutional investors and major corporates, leading to an increase in sustainability-focused investments – either purely for the green credentials, or for the potential for returns from a value chain that will benefit from increased take-up of sustainability actions. The deployment of capex and opex budgets by corporates is also increasingly being influenced by factors such as the social and environmental impact of the spend. ESG factors are thus becoming important considerations in transactions, especially in sectors which are set to grow due to sustainability initiatives, or those that are either socially or environmentally sensitive.
ESG’s role as a major market force is undoubtable, with ESG-focused investments having surged and assets held surpassing US$30 trillion in 2022. The importance of ESG is emphasised by the significant rise in green and sustainability-linked financial service offerings, and ESG-focused spending by Corporates.
ESG’S MOMENTUM IN AFRICA
While sustainable investment is a global trend, Africa is seeing the manifestation of this shift through targeted initiatives and strategic investments that address both regional development and global sustainability goals. Indications of momentum include:
Strategic development initiatives: The African Union’s Agenda 2063 integrates ESG as a key factor for continental development, prompting initiatives such as Gabon’s “Green Gabon” for renewable resource regulation, Benin’s launch of green bonds, and Côte d’Ivoire’s mandatory CSR reporting since 2014.
Corporate strategy: a 2023 Oxford Business Group study revealed that 19.7% of African CEOs pursued ESG standards to enhance their reputation, alongside motivations like regulatory compliance and stakeholder demands. Companies adopt ESG principles to ensure their license to trade and attract capital, which is increasingly targeted at sustainable investments.
South African initiatives: South Africa is a leading African jurisdiction for sustainable investments with national measures. The Johannesburg Stock Exchange (JSE) was the first global stock exchange to introduce a SRI index and it has listed over 70 sustainability-linked bonds, raising approximately R11 billion in 2023. A 2024 review showed significant ESG adoption among JSE-listed companies, highlighting South Africa’s proactive role in promoting sustainable finance and ESG integration across the region. ESG has also been a priority from a regulatory perspective, with the introduction of amendments to the Pensions Fund Act and Public Investment Corporation Act regulations to drive sustainability requirements.
ESG AND SUSTAINABILITY ARE KEY THEMES IN RECENT LARGE AFRICAN TRANSACTIONS
ESG has been a key consideration in recent major transactions in Africa, including:
Proparco Group’s September 2024 investment of $15 million into Pembani Remgro Infrastructure Fund II (PRIF II), a leader in infrastructure investments in Africa with strong ESG credentials;
Vitol Africa’s recent acquisition of Engen for R37 billion, a significant investment into South Africa, with strong ESG underpinnings due to its impact on disadvantaged communities; and
a R9,3 billion loan provided by several lenders, including the Development Bank of Southern Africa Limited; Old Mutual Alternative Investments; Sanlam; and Stanlib Alternative Investments to fund Oya Energy, a hybrid energy project combining solar, wind, and lithium-ion batteries, expected to be the largest initiative of its kind in Africa.
Major corporate and investment banks with strong ESG focuses have also made a significant impact in the region. One South African bank has issued approximately R45 billion in sustainable financing and mobilised approximately R15,5 billion in green project finance and an additional R1,2 billion in social project finance to fund renewable energy, carbon projects, and basic infrastructure in Africa; and another has embraced numerous climate-related initiatives, such as their Green Private Power Tier 2 Bond, launched in 2023 with a notional value of R2,1 billion.
In addition, there are major renewable energy infrastructure projects being financed and coming online in Africa. For example, the Hive Hydrogen Project in Gqeberha – a $4,6 billion project that involves the construction of a green ammonia plant in the Coega Special Economic Zone – which aims to produce 780,000 tons of green ammonia annually, powered by renewable energy sources.
OVERCOMING THE CHALLENGES OF SUSTAINABLE INVESTING IN AFRICA
To successfully tap into the sustainable investment opportunities presented by sub-Saharan Africa, global corporates and capital must overcome the unique challenges of deploying capital and operating in the various jurisdictions on the continent, which requires an intimate and practical knowledge of the diverse regulatory frameworks in operation. In cases such as this, companies looking to invest will be best served by an adviser that understands their needs and priorities, as well as the intricacies of the African investment landscape.
Pitso Kortjaas, Lydia Shadrach-Razzino and Virusha Subban are Partners in Banking & Finance, M&A and Tax | Baker McKenzie (Johannesburg)
This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.
The Finance Director has been appointed as interim CEO
This is the kind of thing that you certainly don’t see every day: the suspension of a listed company CEO. Exxaro has announced that Dr. Nombasa Tsengwa has been placed on precautionary suspension, pending the outcome of an independent investigation by ENS into allegations relating to workplace conduct and governance practices.
They are talking about a need to “stabilise leadership” and if you do some research into this, you’ll find articles about recent resignations of several executives at Exxaro.
Riaan Koppeschaar, the current Finance Director, has been appointed as interim CEO.
It will be very interesting to see the outcome of the investigation!
MAS Real Estate’s share price has fully recovered from the wobbly around dividends (JSE: MAS)
Management’s conservative approach has paid off here
The management team of MAS Real Estate took the brave but necessary decision in mid-2023 to stop paying dividends. This was based on their forecasts regarding debt refinancing requirements and the state of capital markets for funds that don’t have high quality credit ratings, particularly in emerging markets.
As this chart shows, the share price has fully recovered since the sell-down in 2023 when the market panicked about the lack of dividend:
Those who simply held their shares throughout the noise haven’t done well, as they haven’t received dividends along the way and have simply recouped their capital value. The worst decision in retrospect was to sell after the panic, with the best decision being to buy into the panic. It doesn’t work out like this every time, obviously, or nobody would ever panic!
In a voluntary trading update, MAS indicated that the Central and Eastern European countries in which it operates have performed strongly. Like-for-like tenant sales increased 7% year-on-year for the four months to October. Occupancy rates are stable and so are occupancy cost ratios, so that all sounds good. This is driving diluted adjusted distributable earnings guidance for the year to June 2025 of 9.54 to 10.45 eurocents per share.
The management team has made a great deal of progress on the balance sheet, although there is still more to do. Also keep in mind the recent cautionary announcement regarding a potential acquisition of Prime Kapital’s 60% interest in the joint venture between the parties. This would give MAS better credit rating prospects, which would in turn assist with getting the balance sheet right.
Resilient gives slightly better guidance for full-year earnings (JSE: SPG)
The stake in Lighthouse seems to be the highlight at the moment
Resilient released a pre-close update for the year ending December. The South African retail portfolio hasn’t had the best time of things, with sales up 2.9% during the 10 months to October 2024 or 3.6% on a rolling 12-month basis. This is despite the exposure to malls in lower-income areas, which are generally seen as high growth opportunities.
Resilient has been busy with construction activities at several malls, so that impacts sales. A further challenge has been the mining industry performance, hurting malls in key mining areas. There have been some other delays as well, related to key tenant decisions and even labour unrest!
It seems like a scrappy period overall for the local portfolio, although at least lease renewals came in 4.7% higher and new leases were a juicy 15.9% higher.
The likeliest source of the slight uptick in guidance is therefore the performance of Lighthouse (JSE: LTE), as Resilient owns 30.4% of that group. Lighthouse released an update recently that shows exactly why a country like Spain is seen as lucrative.
When interim results were released, Resilient estimated that the full-year distribution would be 428 cents per share. They have upgraded this slightly to a range of 428 to 433 cents per share.
It’s go-time for the Super Group disposal of SG Fleet in Australia (JSE: SPG)
The Super Group share price jumped 15.6% in response
Towards the end of November, Super Group announced that a potential bidder was sniffing around SG Fleet in Australia. Agreeing to a really tight deadline for a due diligence and binding offer seems to have worked, as Pacific Equity Partners came through with a scheme implementation deed at AUD3.50 per SG Fleet share.
SG Fleet is separately listed, so that would’ve helped greatly with the due diligence. Here’s the SG Fleet share price chart, showing how well-timed the offer was:
And here’s Super Group, with this good news helping to reverse some of the damage from the poor performance of the German economy and other jitters around new car sales:
Of course, this deal doesn’t fix any of the other challenges being faced by Super Group. It’s just a really helpful value unlock. If the deal ends up being implemented, Super Group will receive R7,53 billion for its 53.584% stake in SG Fleet. They plan to use up to R1.96 billion to reduce debt, which will take the net debt to EBITDA ratio way down from 2.96x to 0.77x. That’s going to make a big difference!
The remainder of the selling price will be used for a special distribution to shareholders in Super Group of around R16.30 per share depending on exchange rates at the time.
This is a Category 1 transaction, so a circular will be issued and shareholders will vote on the deal. I can’t see them saying no.
Strong numbers at Sygnia (JSE: SYG)
The group now has over R350 billion in assets under management
Credit where credit is due: 10.1% growth in assets under management and administration at Sygnia is impressive. It’s especially impressive when some other players in the industry have thrown their hands in the air and claimed that they simply cannot grow assets due to South Africa’s savings culture. It’s amazing what a bit of innovation can achieve, with Sygnia having achieved net inflows in the retail business of R3.1 billion for the year.
This performance has driven revenue growth of 12.1% and profit after tax growth of 15.6%. Diluted HEPS came in 15.9% higher, which is excellent.
The disappointment is surely the dividend, which for some reason is up just 3.3%. A capital-light business like this should have a consistent and high payout ratio, so I found this rather odd. I couldn’t find any commentary in the report that gives a satisfactory explanation for the decrease in the payout ratio.
It’s certainly not due to any underlying worries about the business, as they sound very confident about exceeding R400 billion in assets under management soon!
More of a meow than a roar at Tiger Brands – yet the market liked it anyway (JSE: TBS)
The share price is up roughly 30% year-to-date
Tiger Brands released results for the year ended September. The underlying metrics aren’t going to blow your socks off, with revenue up just 1% and HEPS up by 4%. The total dividend for the year is 4.3% higher. None of these percentages provide a good explanation for the share price move this year, which tells you that the market is baking in some strong assumptions around growth and the ongoing recovery.
Within the revenue story, we find price inflation of 7% and volume declines of 6%. Consumer affordability is clearly still an issue. The price increases did good things for gross margin though, up from 27.7% to 28.3%. This was further boosted by manufacturing efficiencies.
Operating income was pretty flat for the year. Income from associates increased 4% thanks to Carozzi. On the downside though, net finance costs jumped by a nasty 25.6% thanks to higher debt levels and interest rates in the first half of the year.
The sale of non-core businesses resulted in Tiger banking a substantial non-operational profit on those disposals. This is the major reason why earnings per share (EPS) increased 13% and headline earnings per share (HEPS) only increased by 4%. HEPS excludes stuff like profit on sale of businesses.
The market is looking for things to like about this turnaround, so a metric that probably stood out for investors was the volume performance in the second half (-2%) vs. the first half (-9%). I must point out that price inflation was 5% and 8% respectively, so it’s not as though there was a volume recovery with prices held equal. When inflation is lower, one would expect volumes to do better.
Another potential highlight is in cash operating profit, which increased from R4.3 billion to R4.8 billion. Together with working capital improvements, this took the group to a net cash position vs. a net debt position at the end of the comparable period. This will make a big difference to HEPS in the coming year.
Looking deeper, the more staple products are particularly competitive, as evidenced by the milling and baking division suffering a 10% revenue drop and a 7% decline in operating income. There are a lot of bakeries out there selling bread. On the more unusual stuff, like in the Culinary division, revenue was up 5% and operating income was 51% higher.
Over the short- to medium-term, Tiger expects volume growth of 1% to 3% and revenue growth ahead of inflation, with operating margin in the high single digits.
Nibbles:
Director dealings:
Adding to the recent slew of derivative trades and forced sales under collar structures, we have more trades by Adrian Gore at Discovery (JSE: DSY). The forced sales were worth R137 million. He’s also added another collar structure, buying puts (downside protection) with a strike price of R164 per share and selling calls (giving away upside) with a strike price of R278 per share. The current share price is R194 and these options expire in 2027.
An executive member of the board of directors of Richemont (JSE: CFR) sold shares worth R11.2 million.
The CEO of Growthpoint (JSE: GRT) sold shares worth just over R7 million.
A prescribed officer of Omnia (JSE: OMN) received share awards and seems to have kept the whole lot, with a value of R2 million. This is towards achieving the minimum shareholding requirement in accordance with Omnia’s policies though, so I’m not sure it counts as a bullish signal in the traditional sense.
A director of Clicks (JSE: CLS) has bought shares worth just under R1 million in terms of the minimum shareholding policy at the group. As with Omnia above, I’m not sure how much flexibility the directors have in terms of timing to achieve this, so it’s not the strongest bullish signal around.
A director of a major subsidiary of The Foschini Group (JSE: TFG) sold shares worth R700k.
A prescribed officer and director of a major subsidiary of Mpact (JSE: MPT) sold shares worth just over R200k.
You might recall that Nampak (JSE: NPK) had to jump through a few hoops to get the share incentivisation package for its key turnaround execs across the line. The issuance of shares has finally settled, so Nampak shareholders should feel good about the level of management alignment here.
Capital Appreciation hit by poor profitability in the Software division (JSE: CTA)
Thankfully, the Payments division is doing extremely well
If you just looked at the revenue line and nothing else, Capital Appreciation’s numbers for the six months to September would look lovely. Revenue increased by 10.4%, with great underlying drivers like 13% growth in the terminal estate (the number of POS devices out there). Alas, group EBITDA fell by 3.1% and thus the EBITDA margin fell by a nasty 260 basis points to 18.6%. Sadly, you can’t just look at revenue.
The culprit is the Software division. It grew revenue by just 2.4%, with 9.7% growth in South Africa and an 18.6% decline in the international segment as a large contract reached maturity. This is nowhere near enough revenue growth for the underlying cost base, with Capital Appreciation insisting that they need to retain the skilled staff for when revenue picks up. We’ve been hearing this story for a while now. If the skills are so rare, shouldn’t work for them be flying through the door? With the Software division now in a loss-making position, this approach surely cannot continue for much longer. They note improvements to the sales pipeline and an expected recovery in profits in the next year or so. Let’s hope so.
The net result is an 8.3% decline in HEPS to 5.96 cents. The group increased the payout ratio, so the interim dividend is up 5.9% to 4.50 cents. This is despite cash from operations only coming in at R11.6 million, way down from R159.9 million in the comparable period. It seems that receivables were settled after period-end and that much of the investment has been in inventory, with current demand for devices giving Capital Appreciation the confidence to increase the dividend despite earnings pressure.
This financial year isn’t going to be a pretty one for Exxaro (JSE: EXX)
Core metrics have headed in the wrong direction
Exxaro has released a pre-close update ahead of the financial year-end of December. It paints a picture of a group struggling with a difficult market for its products.
For example, the average benchmark API4 Richards Bay Coal Terminal export price is expected to be down 12.5% year-on-year. The iron ore fines price is expected to come in 11.6% lower. On top of this, sales volumes are down 2%. When prices are volumes are down, you can’t expect happy news.
At least there’s plenty of firepower on the balance sheet. With capital expenditure coming in 11% lower than last year, that’s given some relief in a tough market. The group had R16 billion in net cash at the end of October and intends to retain cash of R12 billion to R15 billion, which suggests that there will be dividends for shareholders despite a difficult year. Time will tell.
Fortress has revised its distribution guidance higher (JSE: FFB)
Revised guidance for FY25 reflects adjusted 14.7% year-on-year growth
Fortress Real Estate has a directly held logistics portfolio of R20 billion in South Africa and Central and Eastern Europe, a South African retail portfolio of R10 billion and a stake in NEPI Rockcastle of R16 billion. This gives you important context for the update released by the company dealing with the period since June 2024.
The logistics space continues to enjoy strong demand by tenants, with 75% of current developments already pre-let. On the retail side, like-for-like tenant turnover of 4.5% is decent, although certainly not spectacular. At least October looked better, with sales up 6.5%. This gives Fortress some confidence heading into the festive season.
Still, the narrative throughout the announcement suggests that Fortress’ heart lies in the logistics portfolio. It’s therefore not surprising that proceeds from the disposal of non-core properties have been mainly recycled into logistics developments, along with some strategic retail redevelopments and extensions. They have locked in proceeds of R746 million since year-end and there’s another R257 million in properties held for sale. The office portfolio is squarely in the firing line for potential disposals, which is to be expected when the vacancy rate is up at 27.9%!
Although the industrial portfolio barely gets a mention, the joint portfolio co-owned and managed by Inospace saw net operating income growth of 15% year-on-year. This comes after achieving growth of 17.5% in FY24, so that’s a demanding base and a really impressive result.
With all said and done, the important update is that distributable earnings guidance for FY25 has been revised higher from 146.99 cents to 147.80 cents. This represents 14.7% adjusted year-on-year growth, which is great. The adjustments relate to the way in which the NEPI Rockcastle shares were used to sort out the dual-class share structure.
With 45% share price growth this year, life-after-REIT is going just fine for Fortress.
Lighthouse isn’t the only group that has noticed Iberia (JSE: LTE)
That’s the beauty of capitalism – great opportunities attract competition
Lighthouse Properties has released a pre-close update dealing with the period ending December 2024. It’s been a busy year for the fund, particularly thanks to recent acquisitions in Portugal and Spain – collectively known as the Iberian Peninsula or Iberia for those of you who didn’t take geography. Wikipedia tells me that the technical definition actually includes a tiny part of France as well, although nobody really means that when they say Iberia!
Since June, Lighthouse has acquired a mall in Portugal for €177.8 million and one in Spain for €168.2 million. In both cases, the net initial yield after transaction costs is 7.2%. On the disposal front, Lighthouse sold Planet Koper in Slovenia for net proceeds of €47 million after the settlement of €21.8 million in debt.
After these deals, the Iberian portfolio now comprises six malls and contributes 81% of Lighthouse’s direct property investments. This looks set to increase, with exclusivity to acquire a further mall in Iberia (expected close in 1Q25) and negotiations underway for another mall. Lighthouse notes that there is more competition for these acquisitions now. Although they don’t say it bluntly, this could put the brakes on the Iberian expansion strategy if they can’t get malls at attractive prices.
How are they paying for this? Well, there was a huge R1 billion accelerated bookbuild in September, with shares issued at less than a 2% discount to the NAV per share. Holds of 73% of shares elected to receive the interim dividend in scrip rather than cash. On top of this, Lighthouse sold its remaining Hammerson shares for around £100 million. There’s also a new 5-year debt facility of €76 million that will become effective in December. The group takes advantage of every possible source of capital out there, as it should.
Looking at performance by country, the Spanish portfolio saw sales growth of 8.4% for the nine months to September, way above the 1.5% inflation rate. Portugal managed sales growth of 3.9%, above inflation of 2.6% but certainly nowhere near as lucrative as what we are seeing in Spain.
The situation isn’t nearly as promising in France, where sales fell 0.5% for the period. The biggest economies in Europe are having a tricky time at the moment.
Of course, what really matters is the distribution per share. Guidance for FY24 is 2.50 EUR cents per share. They expect strong distribution growth in the coming year if the current deals on the table close. The year-to-date share price performance is just 4.5% though, impacted by the strong rand and the way the market tends to react to significant capital raising activity.
Nibbles:
Director dealings:
Regular readers will know that the founding shareholders of Discovery (JSE: DSY) regularly enter into collar transactions to hedge their exposure as part of funding arrangements. Due to the recent performance of the share price, a few tranches have matured at spot prices above the strike price on the call option, hence the directors are forced to sell. The latest sales by Barry Swartzberg come to a whopping R155 million! Remember, this is a forced sale rather than a reflection of the director’s view on the Discovery share price.
An associate of a non-executive director of Afrimat (JSE: AFT) sold shares worth R10.2 million.
A prescribed officer of Thungela (JSE: TGA) sold shares worth R2.6 million.
A prescribed officer of Capitec (JSE: CPI) bought shares in the company worth R1.7 million.
The ex-CEO of Italtile (who is still on the board as a director) has sold shares worth R783k.
A director of Boxer (JSE: BOX) has bought shares worth R496k at a price of R65.00 per share. Here’s another example of a Boxer director happy to buy shares at the post-IPO price.
Coronation (JSE: CML) announced that its B-BBEE transaction has fulfilled all conditions precedent and will now be implemented, with shares issued to the trusts on 3 December.
Those who are happy to accept further shares in Vukile Property Fund (JSE: VKE) in lieu of a cash dividend can do so at a price of R18 per share. This is a 2.2% discount to the spot price on 2 December and a discount of just 0.04% to the 30-day VWAP.
Following the passing of Tito Mboweni, Accelerate Property Fund (JSE: APF) has announced that James Templeton has been appointed as interim chairman of the board. He also already been on the board since February 2022.
The circus that is Kibo Energy (JSE: KBO) continues. The latest is that the company has now terminated the term sheet for the proposed reverse takeover, instead deciding to complete and publish the audited accounts to December 2023 and June 2024. This will enable the suspension of trading from AIM to be lifted. They will then look for an alternative project portfolio to proceed with a revised transaction. The arranger of the reverse takeover, Aria Capital Management, has agreed to put a loan facility in place for Kibo with multiple potential tranches of £500k. They have had to revise the existing loan facility with Riverfort accordingly. I genuinely don’t know how much equity value (if any) will be left in this thing once the corporate restructuring is completed and the mezzanine funding providers have been paid.
Labat Africa (JSE: LAB) is still catching up on its financial reporting, hence the release of a trading statement for the year ended May 2024 after the release of one for the year May 2023. Whichever year you look at, it all looks pretty bad with headline losses as the theme. The loss for FY24 was -3.74 cents, which was at least better than the loss of -7.19 cents in FY23.
Crookes Brothers (JSE: CKS) is moving its listing to the General Segment of the JSE, joining the many other small- and mid-cap companies to have done so in search of less onerous listings requirements.
Jaltech is launching its final Section 12B investment for the 2025 financial year. This investment is designed for investors who have realised late in the year that they need to reduce their tax liability before the end of February 2025.
Taxpayers (individuals, companies, and trusts) with an income tax or capital gains tax liability are invited to join Jaltech’s webinar. During the session, Jaltech will provide an in-depth breakdown of the Section 12B solar investment incentive and introduce its February 2025 Refinance Section 12B Solar Investment.
Investment highlights include:
100% to 150% tax deduction
Projected IRR of 22% – 24%
Projected annual yield of 16% – 17%
Annual income distribution to investors for 10 years
Minimum investment: R500 000
The webinar will take place on 11 December at 12h00. To register, click here. If you can’t attend, register, and Jaltech will send you the recording.
Why Jaltech?
With a track record of superior performance, Jaltech leads the Section 12B investment market by raising and committing over R700 million R700 million across 185+ solar projects and is currently generating double-digit IRRs for investors.
Alexander Forbes: good stuff at the top of the income statement, but what about HEPS? (JSE: AFH)
At least the underlying operations are doing well
Alexander Forbes has released results for the six months to September. Apart from lots of bullish commentary on how the two-pot system is just the greatest thing ever (can they even afford to have a different view?), there are also lots of numbers to consider.
The top half of the income statement looks solid, with operating income up 12% and operating expenses up 11%. Profit from operations increased 13% year-on-year. All of that sounds really good, except it’s a lot less exciting once we reach the bottom of the income statement where we find HEPS from total operations up by just 3%.
Although a higher number of shares in issue have played a role here, the impact of finance costs and a higher tax rate is also relevant.
Encouragingly, the group increased the payout ratio to achieve a 10% increase in the interim dividend.
Aveng sells a property stake to Collins (JSE: AEG | JSE: CPP)
This unlocks capital for Aveng’s core business
Aveng is selling its 30% stake in Dimopoint to Collins Property Group, which already owns the other 70%. The Dimopoint structure goes back to 2015, when Aveng sold its property portfolio to Dimopoint in what was effectively a sale and leaseback. This means that the main tenant in the portfolio was Aveng and they are still exposed to the head lease, an issue that this transaction solves.
Aveng will receive R96 million in cash for the 30% stake, so they are unlocking plenty of capital here. Notably, Aveng received dividends from the Dimopoint stake of R31 million for the year ended June 2024, so it seems as though Collins has picked up this stake for a great price.
Nampak’s revenue growth was blunted by the Diversified South Africa segment (JSE: NPK)
But the real story lies in the improvement to profitability
Nampak has released results for the year ended September. The share price is down 8.5% over 30 days, with the market reacting negatively to the recent trading statement and now these results. Although the turnaround is coming through really strongly at Nampak, it’s all about market expectations baked into the share price vs. the pace of delivery.
Nampak’s revenue from continuing operations grew by just 1%. Within that, you’ll find growth of 4% in Beverage South Africa and 7% in Beverage Angola, with an unfortunate decline of 7% in Diversified South Africa. The struggles in that segment were due to volume declines based on slower customer demand and other issues like an extended plant shutdown by a key customer.
When you reach the profit lines though, all the segments are up spectacularly. Beverage South Africa increased EBITDA by 38% to R806 million. Beverage Anglo jumped from R43 million to R276 million. Even Diversified South Africa saw EBITDA rocket from R15 million to R325 million despite the revenue pressure. It says a lot about the underlying performance that Nampak recorded impairment reversals rather than net impairment losses in this period!
Cash is what really counts of course, with cash generated from operations more than doubling from R741 million to R1.6 billion. This helped drive a decrease in net finance costs of 24% to R926 million.
With all said and done, HEPS from continuing operations for the year came in at R33.61. The share price is all the way up at R425, so perhaps there’s where the market concern has come in. There’s still far more improvement priced into the group.
If you include all the discontinued operations, then Nampak reported HEPS of R13.78. This shows just how important the asset disposal plan has been to get the discontinued operations out of the group.
The impact of new management is clear to see at Naspers – Prosus (JSE: NPN | JSE: PRX)
The entire narrative has changed – and for the better
I remember listening to the call that introduced Fabricio Bloisi to the market as the new CEO at Naspers / Prosus. I liked him immediately. Clearly, this was someone who had owned and operated businesses, not just written up pretty PowerPoints and convinced people to part with their capital. Winds of change were blowing.
The narrative at the group has shifted completely, with focus now on creating a profitable group rather than just growth for the sake of growth. When the focus is on metrics like EBIT rather than market share, you’re on the right track to clean up the portfolio.
Speaking of cleaning up, Prosus hasn’t been shy to sell down certain exposures. They have sold the stakes in Trip.com and Tazz, as well as Swiggy after the IPO. They only invested $290 million in external M&A in this period vs. a whopping $6.2 billion at the peak in 2022. This is no longer an approach of throwing everything against the wall to see what sticks.
Perhaps most encouragingly, the six months to September reveal profitable growth in the eCommerce business. They expect the full-year results to reflect revenue of $6.2 billion in eCommerce and adjusted EBIT of $400 million, which is a huge improvement on just $38 million in the prior year.
One of the highlights in the group includes order growth of 29% at iFood and an increase in adjusted EBIT of 85%. This is the business that Bloisi previously acquired, scaled and sold to Prosus, so it no doubt has a special place in his heart. With numbers like that, shareholders will feel the same love for it.
There are obviously hits and misses in a group this size, with other parts of the business not necessarily doing as well. The trajectory is clearly positive though, with this group giving us a great example of the difference that a CEO can make.
Within the Naspers numbers, I always look out for how Takealot is performing, as this is so relevant to South Africans. Takealot grew revenue by 11% in this period and Mr D was up 12%. They are facing a very competitive environment in South Africa.
The Prosus share price is up 34% year-to-date and Naspers is up 36.5%. Bravo Bloisi!
Standard Bank impacted by currency devaluation in Africa (JSE: SBK)
Reported earnings growth is in the low-to mid-single digits
Standard Bank has an impressive business in Africa. Sadly, the performance of African currencies is far less impressive, including against the rand. This means there’s quite a gap between constant currency results and reported results.
In a voluntary update for the 10 months to October, Standard Bank has flagged earnings growth in the mid-teens on a constant currency basis. That’s all good and well, but the weakness of African currencies means that this dilutes down to low- to mid-single digits when reported in rands.
There are some other reasons for the slowdown in earnings growth, like balance sheet growth that is lower than expected and non-interest revenue decreasing by low- to mid-single digits based on a high base for trading revenue that more than offset growth in fees and commissions.
For the full-year, they still expect revenue growth in the low single digits in rands, with an improvement in margins suggesting that earnings growth will be slightly higher. Group return on equity is in the target range of 17% to 20%.
Transaction Capital’s Road Cover disposal is in doubt (JSE: TCS)
The parties have extended the long stop date – for now at least
Transaction Capital’s disposal of Road Cover is subject to a resolutive condition. This is very different to a suspensive condition, which is what you see far more often. With suspensive conditions, a deal doesn’t close until the conditions are met. With resolutive conditions, the deal closes and then there’s a test later on to see if conditions were met. If they weren’t, you have to try unscramble the egg and restore the parties to the situation they were in before the deal. Not a fun process and hence a less common deal structure.
The resolutive condition refers to certain negotiations that are taking longer than expected. The parties have agreed to extend the long stop date to 13 December. If they miss that deadline, then it either needs to be extended again or the parties will look to be restored to the positions they were in before the disposal.
There’s never a dull moment at Transaction Capital!
Nibbles:
Director dealings:
A director of RFG Foods (JSE: RFG) sold shares in the company worth just over R4 million.
Of the five Oceana (JSE: OCE) directors and executives who received share awards, only one retained shares after paying taxes. The rest sold all the shares worth a total of R2.2 million.
A director of Standard Bank (JSE: SBK) has sold shares worth R1.9 million.
A senior executive of Nedbank (JSE: NED) sold shares worth R1.2 million.
An associate of a director of Boxer (JSE: BOX) has bought shares worth R445k at R63,50 per share. The price is especially important here given the recent IPO activity, as here we have an insider willing to buy shares at the post-IPO price. The same individual also bought shares in Pick n Pay (JSE: PIK) worth R300k, which is even more interesting.
An associate of a director of Trematon (JSE: TMT) bought shares worth R130k.
Zeder (JSE: ZED) has declared a special dividend of 11 cents per share based on the recent asset disposals by group companies that subsequently declared the proceeds up to Zeder as dividends. This allows Zeder to pass the benefit on to its shareholders.
Unsurprisingly, Sasfin (JSE: SFN) shareholders have jumped at the opportunity to take the money and run at R30 per share. Sasfin’s listing on the JSE will be terminated on 30 December after shareholders receive a lovely Christmas pressie on 23 December in the form of their buyout consideration.
Labat Africa (JSE: LAB) is in discussions with a party looking at a potential corporate deal with the group. One of the conditions is that the company secretary needed to be changed, which is particularly odd. Although there’s no guarantee of a deal going ahead, Labat Africa has changed its company secretary as requested. I guess the trading statement released on the same day makes it pretty clear that Labat isn’t sitting on tons of options, with the headline loss deteriorating by 26.14% to 7.19 cents. Keep in mind that the share is suspended from trading and the last share price was 7 cents. They aren’t exactly negotiating from a position of power here.
I still don’t really understand the numbers behind Mantengu Mining’s (JSE: MTU) acquisition of Sublime Technologies, as it looks like a deal that is far too good to be true. It looks to be going ahead though, with the Competition Commission approving the transaction. The only remaining suspensive condition is that the sellers must ensure that Sublime’s bank account has at least $1 million in it.
Trematon (JSE: TMT) announced that the conditions for the Aria Property disposal have been met, so the disposal of the 60% stake in that group is being implemented and they expect to receive the proceeds on 2 January 2025.
Redefine (JSE: RDF) announced that holders of 42.81% of shares elected the share re-investment alternative instead of the cash dividend. This helps Redefine hang onto R668 million in cash. Of course, it also means that lots of new shares have been issued, so watch out for the dilutive effect over time here.
Powerfleet (JSE: PWR) has had to file a prospectus with the US regulators regarding a potential sale of the shares received by the sellers of Fleet Complete and the shareholders who supported the private placement. There are up to 24.8 million shares that these shareholders will look to sell. With only 134 million shares in issue, this is a meaningful percentage of the Powerfleet register.
If you would like to understand more about how property funds execute on their strategies and assess properties in a given area, Hammerson (JSE: HMN) has released a presentation on one of its properties that goes into great detail on how they think as a property asset manager. You can find it here.
Castleview Property Fund (JSE: CVW) has absolutely no liquidity in its stock, so results for the six months to September just get a passing mention here. The distribution per share has decreased by 14.9% to 9.084 cents.
AfroCentric (JSE: ACT) has announced the appointment of Thato Moloele as CFO designate. This comes after the resignation of Hannes Boonzaaier.
Ascendis Health (JSE: ASC) has appointed Lihle Mbele as permanent CFO. She’s been the interim CFO since July 2024, so everyone was obviously happy with how that went and they pulled the trigger on making it a permanent placement.
Numeral (JSE: XII) has acquired to acquire 51% in a biotechnology business called Longevity. It must be a tiny deal, as no further disclosures are required for the deal. With a market cap at Numeral of just R24.8 million, this gives you an idea of how small a deal needs to be to fall below disclosure thresholds.
Sebata Holdings (JSE: SEB) has moved its listing to the General Segment of the JSE, following several other small- and mid-caps who have done so.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
