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Venice Biennale: The world at a glance

If art is a mirror, as the saying goes, then the Venice Biennale offers what can only be described as a panoramic reflection of the world in 2024. In this exclusive for Ghost Mail, Dominique Olivier takes you on a journey into how contemporary art is the outlet for humanity.

Say what you will about contemporary art, but you can’t argue the fact that it delivers a message like very few other things. Every two years, the Venice Biennale stands in as a kind of megaphone to amplify the voices of artists from almost every country in the world. Official statistics reveal that in 2022, more than 800,000 visitors attended this global art exhibition, which runs from April to November.

That’s a lot of people, looking at a lot of art. And this year, I was lucky enough to count myself among them to bring Ghost Mail readers an experiential look at this incredible event.

This year’s theme, “Foreigners Everywhere”, introduced works and conversations centred around immigration, refugees, exile, outsiders and those who live on the margins. It’s an evocative theme, made all the more relevant and powerful as hostilities between countries continue to play out in the background of the event.

The politics of space

It’s an awkward thing to have to represent your country on the international stage while you’re in the throes of war. Russia and Israel each have a private pavilion in the sought-after Giardini section of the Biennale, while Ukraine has a space in the shared Arsenale space a short walk away.

Before you wonder if there is some sort of favouritism in the allocation of pavilions – there genuinely isn’t. The Giardini (literally, “garden”) is the original site of the Biennale, which in its earliest days was confined to one building. As more countries were invited to participate over time, space became a problem in the main building. Biennale organisers started encouraging countries to invest in and build their own pavilions in the Giardini, with Belgium being the first to do so in 1907. Since then, 28 other countries have built pavilions, with Korea claiming the final spot in the Giardini in 1995.

The Giardini reached capacity at the end of the 90s. Countries not owning a pavilion started exhibiting in other venues across Venice, with the majority renting exhibition spaces in the restored Arsenale (the largest production centre in Venice during the pre-industrial era, responsible for churning out those famous Venetian galleons).

Russia built its pavilion in 1914, while Israel built theirs in 1952. Ukraine made its first appearance in the Arsenale in 2003, about eight years too late to claim a spot in the Giardini.

You’re probably wondering how our local artists make do at the Biennale. After being ostracised for decades due to the Apartheid regime, the South African pavilion had its debut in the Arsenale in 1993. It’s not the Giardini, but it’s a decent space.

I know I said there isn’t any favouritism that plays into the allocation of exhibition spaces, and that is mostly true. Still, we can’t really ignore the fact that the countries represented in the Giardini are the ones who were able to afford to build a pavilion between 1907 and 1995  – a period of time that saw both World Wars and the Cold War come and go, along with loads of other global events.

This means that an overview of the Giardini versus the Arsenale gives you quite a good idea of who the developed market players in the world are, compared to those who have traditionally existed on the fringes. In the Giardini, you’ll find Great Britain, North America, Germany, France, Switzerland and Japan. In the Arsenale, you’ll find China, Indonesia, Mexico, Singapore and the UAE.

Emerging vs. developed markets, anyone?

Russia/Bolivia

While each exhibition space at the Biennale is representative of a country, having an artist from that country exhibiting there is more of a convention than a rule. Historically, some countries have invited artists from other nations to exhibit in their spaces for various reasons.

A good example would be the tiny island nation of Tuvalu, an island country in Polynesia that very few people ever expected to see represented at the Biennale due to the costs involved in exhibiting. Tuvalu is forecast to be one of the first countries in the world to disappear due to rising sea levels brought on by global warming. Desperate to bring attention to their plight on the global stage, Tuvalu came to the Biennale in 2013 and 2015. In both instances, they selected globally-renowned Taiwanese eco artist Vincent J.F. Huang to represent them and their message.

I was morbidly curious to see what would be going on in the Russian pavilion this year. I was very surprised to encounter a kind of pop-up pavilion for Bolivia inside the Russian building. This is not the same as Vincent Huang representing Tuvalu; the Bolivians are representing themselves, not Russia.

The official story is that Russia is “lending” their space to the Bolivians this year. Russia itself hasn’t been represented at the Biennale since the country first invaded Ukraine in 2022. Their 2022 exhibition was cancelled on February 27 of that year, just days after the first invasive action. Artists Alexandra Sukhareva and Kirill Savchenkov, as well as curator Raimundas Malašauskas, announced their resignation on social media. “There is nothing left to say, there is no place for art when civilians are dying under the fire of missiles,” wrote Savchenkov. “As a Russian-born, I won’t be presenting my work in Venice.”

It may seem like a random alliance – Russia and Bolivia – but the decision coincides with cultural cooperation, lithium extraction and atomic research agreements between the two countries. In 2023, Bolivia signed a lithium agreement with Rosatom, Russia’s state nuclear agency, on tapping the country’s reserves of the metal. Bolivian president Luis Arce openly congratulated Vladimir Putin for his victory with over 87% of the vote in the 15-17 March presidential elections.

Art. Politics. It’s all connected.

Israel

Not far from the Russian/Bolivian pavilion, the Israeli pavilion stands in darkness. Israeli artist Ruth Patir, who was chosen to represent Israel at the 2024 Venice Biennale, announced she will not open her exhibition for the national pavilion until “a ceasefire and hostage release agreement” is reached between Israel and Hamas. Patir, along with the pavilion’s curators, Tamar Margalit and Mira Lapidot, did not inform the Israeli government ahead of time about their decision to postpone the opening. The pavilion, titled “(M)otherland,” was set to include several new works featuring computer-generated imagery; one piece remained partially visible through the front window during my visit. 

In mid-October last year, a few weeks into the Gaza conflict, Israel confirmed its intention to move forward with the pavilion, despite calls from the art world for the country to withdraw. In February, thousands of artists signed an open letter urging the Biennale to cancel Israel’s participation, accusing the event of “platforming a genocidal apartheid state.” Several artists in the main exhibition joined this call. Italian Culture Minister Gennaro Sangiuliano responded by confirming that Israel would participate as planned, emphasising that any country officially recognised by Italy is entitled to present a national pavilion. Come for the art, stay for the pizza.

Curator Francesco Bonami’s proposal to include a Palestinian pavilion at this year’s Biennale was immediately met with claims of antisemitism, and the country ultimately did not mount a presentation. To date, Palestine has never been represented at the Biennale.

Ukraine

Ukraine was well-represented at this Biennale this year, which is a feat made all the more impressive when you take into account that they also managed to get an exhibition to the Biennale in 2022. La Biennale, the cultural organisation behind the entire event, committed to supporting Ukraine’s national pavilion in 2022, which had to pause preparations following Russia’s invasion. In addition, a temporary “pavilion” called Piazza Ucraina was set up by the Biennale near Russia’s closed pavilion. This last-minute tribute to the embattled country featured a wooden structure that appeared charred, symbolising the devastation Ukraine has faced.

This year’s Ukrainian pavilion in the Arsenale has not left my mind since I saw it. Titled Net Making, the exhibition features the works of various Ukrainian artists, installed in a space that has been swathed in camouflage netting. As per the curator’s statement, “People in Ukraine and abroad, often strangers, gather to weave together camouflage nets. It’s a practice driven by tragedy, but it can also function as therapy or social occasion. It is the epitome of self- organisation, horizontality and joint action, and a means of emancipation”. 

All of the works in the space are excellent, but the one that made me feel slightly sick (in a good way) was Civilians. Invasion by Andrii Rachynskyi and Daniil Revkovskyi (yes, there’s a full stop in the middle of the title). This video work features archival videos collected from open sources, shot by civilians before and during the Russian invasion.

In home-video style footage, two small children respond with excitement when their mother returns from the store with a pair of ice-creams for them; she could not finish the shopping, she explains, because there was bombing, so she grabbed the ice-creams and ran. A distressed woman paces in the street, describing to her neighbour that she was walking her dog, who then ran off at the sound of an explosion. A couple searches for their belongings in the bombed-out remnants of their apartment. These glances into the “new normal” are visceral yet magnetic, and I’ll admit that I stood there and continued to watch far past the point of my own comfort.

On the wall across from the screen showing these videos, there’s a first-person shooter video game playing on loop. The space asks you to consider how easy it is to kill people on PlayStation vs. the tragedy in real life.

Biennale 2026

As I dream of returning to Venice in 2026, I can’t help but wonder what the next Biennale might look like. The political, social, and environmental challenges of recent years have set the stage for more urgent conversations in the art world, and 2026 could see a Biennale that continues to push boundaries in these areas. We might expect even deeper explorations of displacement, identity, and global interconnectedness – especially as climate change, geopolitical tensions, and technological advancements continue to shape our world. 

Will we see more collaboration between countries, new voices from previously underrepresented regions, or an even bolder critique of power dynamics? Will we see the introduction of an AI pavilion? Only time will tell, but one thing is certain: the Venice Biennale will once again offer a window into the heart of the world, and that is a window worth keeping an eye on.

The gelato certainly isn’t bad, either.

About the author: Dominique Olivier

Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting.

Dominique can be reached on LinkedIn here.

Ghost Bites (EOH | Metair | Northam Platinum)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:


When will EOH turn a profit? (JSE: EOH)

Even after the rights issue, the group is loss-making

Back in February 2023, EOH closed a rights issue that gave them R555 million to reduce debt. This helped them negotiate a lower rate for all remaining debt, so investors would be forgiven for thinking that the business should be able to make a profit. Alas, despite the decrease in debt, EOH still made a loss in the six months to January 2024 – and not a small one either. The interim headline loss per share was 11 cents.

Those who take the KFC approach to their portfolios of Adding Hope might have believed that the worst was behind EOH, with an ability to at least be profitable in the second half of the financial year. With guidance for the full-year headline loss per share of between 10 cents and 30 cents, it looks likely that the second half was hardly any better than the first half.

And yet here we are, with the share price of R1.82 well above the rights offer price of R1.30. The share price is up 27% this year thanks to the GNU exuberance.

Is it justified? Personally, I prefer not to hold loss-making IT groups with low margins operating in highly competitive markets. Others seem to feel differently, although a 5.7% drop on the day after releasing the full-year guidance suggests that some of the bulls seem to be leaving the room.


Metair swoops in on Autozone and buys itself a route to market (JSE: MTA)

After private equity killed Autozone with debt, Metair is buying it out of business rescue

Perhaps showing my age here, but leveraged buyouts always remind me of the 50 Cent album: Get Rich or Die Tryin’. Basically, a private equity house backs a management team and plugs in loads of debt to help with a buyout from existing shareholders. In doing so, they risk the entire business and the livelihoods of everyone involved, all while putting in a thin equity layer and transforming a legacy business into little more than a venture capital play.

When it works, they make a fortune. When it doesn’t, a business is destroyed. Lovely, isn’t it?

Autozone has been the latter story, with a buyout in 2014 that put loads of debt on the balance sheet at the wrong time for South Africa. The private equity fund in question is Ethos, but all the private equity houses do these types of deals.

How much debt? Well, to give you some idea of the interest burden in the year ended June 2024, Autozone managed EBITDA of R62 million and a net loss of R61 million. They have a balance sheet problem, not a business problem. They managed this level of EBITDA despite being throttled by the balance sheet and unable to invest properly in working capital.

In these situations, business rescue can work really well because there’s actually a business worth rescuing. Metair has swooped in as the hero here, but don’t mistake this for altruism. No, Metair has a plan to use Autozone as a route to market for its car parts manufacturing business and I think that’s a pretty smart strategy. A strategic buyer (like Metair) is almost always a better deal for everyone involved than a purely financial buyer (like private equity).

If you’ve been following Metair though, you’ll know that their balance sheet isn’t exactly a hall of fame candidate either. They’ve just announced the sale of the Turkish business, a disposal that is nothing short of urgent thanks to how much pressure Metair is under. Despite this, they just couldn’t resist buying Autozone for an effective investment of R290 million, with R215 million going to the creditors (Absa being the main one) and R75 million going into working capital. The equity itself is worthless at the moment.

If Autozone’s working capital deteriorates below R344 million as at the closing date, Metair has the right to walk away. This is to protect Metair from a situation where things get even worse before the deal is closed.

Brave stuff from Metair, but I really like the deal. I just wish the Metair balance sheet was in a position of strength for this.

As speculative plays go, this is an interesting chart:


Eskom might have improved, but Northam Platinum still sees value in solar (JSE: NPH)

This is the company’s first major renewable energy project

Although load shedding seems to have been banished to the history books (and long may it stay there), Northam Platinum is still prioritising renewable energy. This isn’t just because of environmental targets and the obvious benefits of renewable energy. There are cost savings to consider as well, along with power supply risks and the possibility of Eskom deteriorating again.

Despite all the pain in the PGM sector at the moment, the business case for this project is strong enough that Northam Platinum is going ahead with a Power Purchase Agreement in respect of an 80MW solar power plant to service the Zondereinde operation. Effectively, they are committing to buying power from the company that will build the plant.

Power is expected to be available from December 2025, with the independent power producer carrying the capex burden for the project.


Nibbles:

  • Director dealings:
    • Truworths (JSE: TRU) very cleverly noted that all director sales of vested awards were either to settle tax or rebalance their portfolios. They just don’t give that detail per director. This is very poor disclosure that in my opinion shouldn’t be allowed, as I want to see exactly which sales are to cover tax and which are not.
    • From what I can see, the majority of Discovery (JSE: DSY) directors sold their entire share award. Only a couple of them retained shares after selling to cover the tax. Among those who sold everything are the founders of Discovery, which is interesting after decent results. This suggests that the share price has run a bit too hard.
    • A director of ADvTECH (JSE: ADH) has sold shares worth R309k.
    • The CEO of Hammerson (JSE: HMN) reinvested her dividend in shares worth £2k.
  • Barloworld (JSE: BAW) has renewed the cautionary announcement regarding discussions that could affect the price of the company’s shares. Sadly, at this stage, we have no further details on what those discussions could be.
  • Chrometco (JSE: CMO) obtained shareholder approval to change the name of the company to Sail Mining Group.

Ghost Bites (Alphamin | Balwin | Hammerson | Jubilee Metals | Telemasters | Vukile)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:


Congratulations to Forvis Mazars, who make Ghost Wrap podcasts possible, for their appointment as auditors of Rex Trueform and African and Overseas Enterprises.


Records tumble at Alphamin (JSE: APH)

Mpama South has had a major impact here

Alphamin has released results for the quarter ended September. They tell a great story, with record quarterly tin production (up 22% vs. the preceding quarter, let alone year-on-year) thanks to Mpama South making a full contribution for this quarter vs. only a portion of the preceding quarter.

EBITDA looks to be coming in at $91.5 million, which is a 69% increase on the preceding quarter. Before you wonder how this is possible with only a 22% increase in production, the key is that sales were up 71% as the group caught up on sales disruptions.

Distortions aside, it’s obviously a lovely set of numbers. The production increase came at the right time, as the average tin price achieved actually fell by 2% vs. the preceding quarter. Combined with a 1% increase in all-in sustaining costs per tonne, it could’ve been a very different set of numbers without the production and sales volume uplift.

The interim dividend of CAD$0.06 per share is double the previous level.

The Alphamin share price is up 30% in the past year and the market liked these numbers, as you’ll see in this chart:


Balwin will want to erase the memory of this period (JSE: BWN)

Perhaps things will improve going forward

The six months to August 2024 were an unhappy time for Balwin. To be fair to them, I don’t think an election period is ever good for durable asset sales – and especially property. Combined with the prevailing high interest rates, I’m not shocked that Balwin’s HEPS fell by between 54% and 59%.

The second half of the year will hopefully be given a boost by the recent reduction in interest rates. More cuts are surely to come, giving further assistance to prospective homeowners (and thus Balwin).

It says a lot that the annuity business portfolio contributed 8% to revenue in this period vs. 4.7% in the comparable period. That says less about the annuity business and more about the ugly drop in apartment sales, with a decrease from 834 to 640 apartments for the period.

Balwin hilariously blames this on a “conservative construction approach” as though they are a Ferrari-esque business that deliberately withholds supply. The reality is that demand simply wasn’t there and the group would do better to just accept that issue rather than coming up with flawed arguments to explain the performance.

All this does is detract from some of the genuine highlights, like a 5% drop in group overhead costs and 15% operating profit growth in the annuity side of the business.

I’ve been bearish on this thing since 2021 and I haven’t been wrong on it yet, with this chart putting the GNU-inspired rally in context:


Hammerson gives us a data point on the cost of UK money (JSE: HMN)

This is an issuance of 12-year bonds to the value of £400 million

Bond issuances are nothing unusual, especially in the property sector. The funding ladder has instruments with various maturities, ranging from shorter-dated notes through to bonds that mature in several years. Still, a 12-year bond is quite an unusual thing to see at a corporate. It might be a UK vs. SA thing, with corporates able to issue longer-term debt in a developed market vs. an emerging market.

Either way, Hammerson has managed an issuance of £400 million worth of bonds that mature in 12 years from now. In the same way that a fixed deposit for a longer period of time gives you a higher return at your bank, the cost of debt for a longer-term bond is higher for a corporate. Hammerson has priced the bonds at 5.875%. Remember, that’s a GBP-denominated rate.

The proceeds will be used to redeem various other bonds that mature in the next few years. The company recently announced a tender offer to facilitate this, which is an invitation to holders of those bonds to ask Hammerson to redeem them. Encouragingly, the issuance of the new bonds was 7x oversubscribed, so there’s no shortage of investor interest. Pun intended.


Jubilee Metals focused on chrome and copper as the PGM market fell away (JSE: JBL)

Even then, they couldn’t save this result

Jubilee Metals has released reports for the year ended June 2024. They reflect growth in revenue of 20.2%, yet a decline in EBITDA of 7.1%. It gets much worse by the bottom of the income statement, where HEPS has crashed by 86%. Although an increase in the weighted average shares in issue of 6.3% didn’t help there, it was the jump in finance costs that caused the major deterioration between EBITDA and HEPS.

They had a really tough time in terms of the underlying commodity exposure, with the PGM price down by 20.1% per ounce. Copper was down 6.5%, but at least they could ramp up production of that metal. Chrome was the pick of the litter and by a long way, with the price up 26.3% and production up by 20%. Their focus has been on getting the best out of the chrome business at a time when PGMs are really struggling. Copper is in the process of being ramped up in Zambia, so there should be a major jump in production there.


Telemasters reports a sharp drop in earnings (JSE: TLM)

When margins are thin, the group can’t afford a decrease in revenue

Telemasters consists of a variety of IT businesses, some of which are in the ICT space where margins really are incredibly thin. Last year, they managed operating profit of nearly R2.3 million off revenue of R64.2 million. It’s even worse this year, thanks to a 6.7% decrease in revenue driving a 42% drop in operating profit.

By the time we reach HEPS level, the drop is 16%. It’s a lot worse for the dividend, which has fallen by 88%.


Vukile unlocks capital in Spain (JSE: VKE)

The sale of Lar Espana by Vukile subsidiary Castellana is at a better price than anticipated

Vukile told us back in July that its Spanish subsidiary Castellana had received an offer for its 28.8% stake in Lar Espana. The initial price on the table was EUR 8.10 per share. After a couple of months of negotiations, the price is up to EUR 8.30. It’s worth noting that the net asset value (NAV) per share for Lar Espana is EUR 10.22, so the buyer is still getting it at a discount to NAV.

This unlocks just under EUR 200 million in cash for Castellana. Most impressively, it also means they achieved an internal rate of return of 45% per year since January 2022 (in ZAR terms) on that investment – impressive stuff!

The capital will be most helpful for the Iberian peninsula strategy, with Vukile (through Castellana) investing in Portugal as well as Spain.

There are various conditions that still need to be met before the cash will flow, including a minimum number of acceptances from other Lar Espana shareholders as well.


Nibbles:

  • Director dealings:
    • A prescribed officer of Capitec (JSE: CPI) sold shares worth nearly R7.5 million and the company secretary sold shares worth R634k.
  • Spar (JSE: SPP) could really do with an experienced hand right now and they seem to have found one in the form of Moegamat Reeza Isaacs, the ex-CFO of Woolworths. Having spent a decade on the board of Woolworths until 2023, he’s ready for a new challenge it seems. And a challenge it will be – taking the CFO role at Spar is no joke at the moment, thanks to the offshore challenges and the SAP rollout into the remaining distribution centres. Good luck to him in the new role!
  • Eastern Platinum (JSE: EPS) has commissioned the PGM processing facility at the crocodile river mine. The plant has begun processing run-of-mine ore, delivering concentrate that is being delivered to Impala Platinum under the existing offtake agreement. The chrome retreatment project is expected to wind down in the early part of 2025, so this PGM facility is the focus going forward.
  • Choppies (JSE: CHP) is set to pay a dividend of 1.862 cents per share on 28 October 2024.

Who’s doing what this week in the South African M&A space?

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Exchange-Listed Companies

Lesaka Technologies will seek shareholder approval for a proposed B-BBEE transaction in which the Group will sell a 3% stake in the company (2,49 million shares) to qualifying employees for c.R212,6 million. The approximate number of participants in the ESOP will be 2,400. The shares will be vendor funded by the company through a notional vendor funding structure which will have a seven-year term.

Brimstone Investment has disposed of 43,565,057 STADIO shares (a 5.14% stake) to ThembiSA Fund 1, a black private equity fund managed by ThembiSA Equity Investments, at a price per share of R5.90 for an aggregate R257 million. Brimstone acquired 78% of the sale shares as part of STADIO’s B-BBEE private placement in 2017 and a further 22% in 2018 through a share swap agreement with STADIO. The shares were subject to a lock-in period of 4 December 2024 and 22 March 2025 respectively. ThembisSA has assumed the original lock-in arrangements. Brimstone will use the proceeds to meet funding obligations.

Though its subsidiary Castellana Properties, Vukile Property Fund has negotiated an improved offer price of €8.30 per share (up from €8.10) for its 28.8% stake in BME-listed Lar España Real Estate. The purchasing consortium of Hines European Real Estate Partners III and a vehicle controlled by Grupo Lar Inversiones Inmobiliarias, will pay €199,95 million in cash for the stake reflecting an internal rate of return of c.45% per annum since January 2022 in ZAR terms. The proceeds will be used to invest in financially accretive opportunities with significantly lower operational and execution risks.

African Dawn Capital has released details of its disposal of a 50% stake in its wholly-owned subsidiary Elite Group, a credit provider with a national footprint in South Africa. EXG Partners has invested R5 million for the stake through the subscription of ordinary shares and has provided a long-term commercial loan of R15 million to Elite. The audited loss attributable to Elite as at the last audited financials of the African Dawn Capital was R11,9 million. The disposal is categorised as a category 1 disposal, requiring shareholder approval.

ADvTECH has purchased FNB’s (FirstRand) former training and conference centre in Sandton for an undisclosed sum. The company will create a new University campus, investing in new lecture facilities and a new sports centre and will relocate the IIE’s Varsity College Sandton and Vega Bordeaux to the site for the start of the 2026 academic year.

As part of its preparation ahead of the reverse takeover by Swiss investment group ESGTI AG, Kibo Energy PLC has negotiated the partial settlement of the RiverFort Loan (of £462,871) with the sale of its remaining 19.52% interest in Mast Energy Development PLC (MED) to RiverFort Global Opportunities for £120,074. The 19.52% stake comprises 83,211,746 MED shares (listed on the LSE) at £0.001443 per MED share calculated as at the volume weighted average price per share on 27 September 2024.

NEPI Rockcastle has entered into a binding agreement to acquire Kasama Investments, which owns Magnolia Park situated in Wroclaw in Poland. The property has been acquired from Union Investment Real Estate GmnH for an aggregate purchase consideration of €373 million, including the full settlement of Magnolia Park’s outstanding debt. The transaction is classified as a category 2 transaction by the JSE and as such does not require shareholder approval.

Following the listing of We Buy Cars and the disposal of Nutun Australia and Nutun Transact, Transaction Capital (TC) has now disposed of a 64.5% stake in the Mobalyz Group (previously known as SA Taxi). The company will continue to hold a minority stake in the business. Prior to the disposal, TC disposed of RC Value Added Services to its wholly owned SATH for a purchase price of R160 million which will remain as a subordinated loan. TC will continue to hold a minority stake in SATH of 26% via its shareholding in Mobalyz. Following the disposal of a majority stake in Mobalyz, TC’s sole operating business will be Nutun South Africa and will at its shareholder meeting in March 2025 look to changing its name to Nutun.

MultiChoice and Canal+ have advised that they have made a joint merger control filing pertaining to the offer announced in March 2024, to the Competition Commission. The deal is classified as a ‘large merger’ and as such requires approval from the Competition Tribunal.

Delta Property Fund has disposed of two properties to Currolink Investments for an aggregate R33 million. The properties – 63 Maitland Street in Bloemfontein and 95 Du Toitspan Street in Kimberley are in regions Delta has earmarked for exit.

Unlisted Companies

South African card issuing orchestration and Infrastructure-as-a-Service enabler Scale, has completed a pre-seed funding round raising US$700,000. The round was led by early-stage investors 54 Collective and First Circle Capital, with participation from Sunny Side Venture Partners and prominent angels from the industry. The fundraise will be used to accelerated Scale’s market entry into Kenya, Zambia and Cote d’Ivoire.

TMF Group, a global provider of compliance and administrative services, has acquired the corporate services business in South Africa of the Stonehage Fleming Group, an international Multi-Family Office. The Stonehage Flemming Corporate Services South Africa (SFCS South Africa) acquisition expands TMF’s local presence and affords SFCS access to a global platform with large global clients and capabilities. Financia details were undisclosed.

TUNL, a South African parcel shipping platform which helps e-commerce merchants on international shipping costs, has raised a seed round led by E4EAfrica, together with Jonathan Smit, Jozi Angels and an SPV arranged by Utopia Capital Management. The new funding will continue to fuel its expansion in South Africa by removing the barriers to international selling and shipping faced by local SMEs.

Founded in 2021, Littlefish, a local fintech company empowering and enabling commerce, particularly for nano, micro, and small business has closed a seed investment round led by TLcom Capital, with Flourish Ventures as a co-investor. The funds will be used to accelerate its plan to empower banks to more efficiently service small and medium-sized companies. The investment is a first for TLcom in SA, which sees the potential for Littlefish to help bridge the financial services gap for the more than 80 million SMEs across Africa.

Petrobras, the Brazilian state-owned oil company, is to acquire a 10% stake in the offshore Deep Western Orange basin oil block in South Africa after a competitive process held by TotalEnergies. The French oil major will retain a 40% stake in the block. Other parties include QatarEnergy (30%) and Sezigyn (20%).

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Weekly corporate finance activity by SA exchange-listed companies

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AltVest Capital, which is in the process of moving its listing from the Cape Town Stock Exchange (CTSE) to the JSE’s AltX, has announced the results of its capital raise. The company raised R18,2 million (from a potential R116,9 million) and will issue 1 million Ordinary shares, 1,619,224 A shares, 409,695 B shares and 1,339,416 C shares. The Ords, A, B and C shares were offered at the following price per share – R6.50, R1.80, R11.00 and R3.20 respectively. Each of the equity offerings (A-C shares) are linked to an investee company – Umganu Lodge, Bambanani Family Group and Altvest Credit Opportunities Fund. The shares will commence trading on AltX from 14 October 2024.

Efora Energy’s suspension on the JSE, implemented in October 2020, has been lifted as of trading on 30 September 2024. The company was suspended for failure to submit its annual financial statements in the required time frame in accordance with the JSE Listing Requirements.

Companies still suspended on the JSE and providing updates to shareholders include Chrometco, Conduit Capital and PSV.

This week the following companies repurchased shares:

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 925,327 shares were repurchased for an aggregate cost of A$3,39 million.

In line with its share buyback programme announced in March, British American Tobacco this week repurchased a further 447,913 shares at an average price of £27.51 per share for an aggregate £12,3 million.

Prosus and Naspers continued with their open-ended share repurchase programmes. During the period 23 – 27 September 2024, a further 4,382,351 Prosus shares were repurchased for an aggregate €162,3 million and a further 155,863 Naspers shares for a total consideration of R596,6 million.

Two companies issued profit warnings this week: Insimbi Industrial and Balwin Properties.

During the week, five companies issued cautionary notices: Tongaat Hulett, TeleMasters, African Dawn Capital, Clientèle and PSV.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Who’s doing what in the African M&A and debt financing space?

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DealMakers AFRICA

Nigerian agritech, Winich Farms, has completed a US$3 million debt and equity pre-series A funding round. The round was supported by Acumen Resilient Agriculture Fund, Climate Resilient Africa Fund, Marula Square, Plug and Play, Tekedia Capital and Sahel Capital. The funding will be used to scale operations, enhance its digital platform and expand its financial services to more farmers.

Afreximbank’s development impact invest arm, The Fund for Export Development in Africa (FEDA) and Africa Finance Corporation (AFC) have made a US$443 million investment in Dubai-based Arise IIP. FEDA invested $300 million for their equity stake and AFC increased their shareholding by $143 million. Arise IIP is a pan-African developer and operator of industrial parks. The funding will be used to accelerate expansion and operational efficiency across its 12-country portfolio which includes Malawi, Cameroon, Sierra Leone, Benin, Togo, Ivory Coast, Rwanda, Gabon, DRC, Republic of Congo, Chad and Nigeria.

Apple Orchards, a Kenyan agriculture enterprise specialising in apple seedling cultivation, has received a US$1 million term and working capital loan from Sahel Capital’s Social Enterprise Fund for Agriculture in Africa (SEFAA).

The Saudi Investment and Industrial Development Company, a subsidiary of the Saudi Paper Manufacturing Company, has sold its entire stake in Moroccan Paper Manufacturing Company to Omar Al-Nasi for MAD19 million.

Injaro Investments subsidiary, Investment Capital Partners, via the Pro Impacto Fund, has announced an undisclosed investment in AGRA, Lda in Cabo Verde. AGRA is a producer of poultry and animal feed and is the fund’s second investment in the West African island country. The funding will enable AGRA to modernise its operations and increase production capacity.

Kenya-based Dhamana Guarantee Company will start operations to mobilise private sector finance to support the development of sustainable businesses, following investments from InfraCo Africa, the African Devlopment Bank and CPF Group, with support from Cardano Development and FSD Africa. Dhamana will issue guarantees to commercially viable projects, businesses and institutions that tackle the climate crisis.

Prudential plc has agreed to acquire the remaining shares in its Nigeria joint venture business, Prudential Zenith Life Insurance. The value of the deal was not disclosed but will be paid in cash and includes a performance-based element. In 2017, Prudential acquired a 51% stake in the then Zenith Life Insurance.

AJN Resources has entered into an agreement with Lord Purus Trading (LPT) to acquire up to a 70% stake in the Dabel Gold Project, situated in Marsabit County. The project lies within the Adola Gold Belt which hosts the Lega Dembi gold mine. AJN can acquire up to a 70% interest in the project through the issue 5,000,000 shares in the share capital of AJN to LPT within 10 days of signing the agreement, conducting a 90-day due diligence, following which, if they wish to continue, they will acquire a 60% stake and issue 19.9% of its share capital to LPT, make a payment of US$50,000 on signing the Agreement, a further $50,000 on completion of a fundraise and $250,000 after six months from signing the agreement. AJN will also pay an additional $500,000 on the anniversary of the $250,000 payment for the duration of the exploration phase. AJN can acquire an additional 10% interest in the Dabel Gold Project by paying $10,000,000 to LPT within two years from the commencement date or paying $15,000,000 within three years from the commencement date.

DealMakers AFRICA is the Continent’s M&A publication
www.dealmakersafrica.com

Ghost Bites (Brimstone – STADIO | Clientele | Delta | Lesaka | Powerfleet)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:


Brimstone has sold its stake in STADIO – one of its best assets (JSE: BRT | JSE: SDO)

The buyer is also a B-BBEE investment group, so the empowerment credentials are preserved for now

Due to the level of financial assistance typically given by a company in structuring a B-BBEE deal, it is common in the market that the shares are subject to a lock-up i.e. minimum investment period. Companies simply cannot afford to do a new B-BBEE deal every couple of years. Lock-ups tend to be between 7 years and even 10 years, thereby matching the investment period that is often used in the private equity industry.

Sometimes, an investor needs to wriggle out of a lock-up. In such a case, the company might be OK with this provided there’s a suitably empowered buyer waiting in the wings to take the stake. Whilst I doubt that this would be the case for most of the stuff in Brimstone’s portfolio, STADIO is an exception due to the excellent recent performance.

Of course, this means that Brimstone is selling off one of its few crown jewels to help the group meet its funding obligations for the near- to medium-term. That’s not an ideal way to raise R257 million.

The purchaser is ThembiSA InvestCo 2, an investment entity managed by ThemsiSA Equity Investments and PSG Group. They will honour the remaining lock-up period until March 2025.

Things can’t be great at Brimstone if they went to all this effort just to buy themselves a few months.


Something is happening at Clientèle (JSE: CLI)

The cash cow is considering an acquisition

Clientèle is one of the best examples on the JSE of the importance of looking at total return, not just share price return. Despite not being a property group, Clientèle offers a very juicy dividend yield. They are seen as a cash cow rather than a growth story. I hope that whatever they are up to here isn’t going to be an attempt to change that situation, possibly to the detriment of shareholders.

For now, all we know is that Clientèle is the preferred bidder to acquire 100% in a financial services entity of some kind. They don’t even mention the products or services offered by the entity, so we are very light on details at the moment.

The share price closed 8% higher in response to this cautionary announcement.


Delta agrees to sell two properties for R33 million (JSE: DLT)

Fixing this balance sheet is like digging a hole with a spoon

Delta Property Fund is selling two properties, one in Bloemfontein and the other in Kimberley, for R33 million. That’s good news. As a reminder of just how much work the company still needs to do to rescue the balance sheet, this will only reduce the loan-to-value ratio by 10 basis points from 60.9% to 60.8%. Vacancy levels will reduce by 50 basis points to 32.9%.

These are government office buildings and one of them has a vacancy rate of a whopping 90.7%, so good luck to the purchaser! An independent valuation on the properties put them at a combined R38.6 million, so Delta is getting them off the balance sheet at a modest discount.


Lesaka closes the acquisition of Adumo (JSE: LSK)

This is a major step for the group

I think that Lesaka is one of the most interesting stories that you’ll find on the local market. In fact, we hosted the management team on Unlock the Stock recently, where I peppered them with questions and was left feeling very impressed. Here’s the full presentation and Q&A:

Key to the strategy is the acquisition of fintech businesses (like payments processers) that give Lesaka more reach into its markets of choice. The acquisition of Adumo is a major step in this regard, with the R1.67 billion acquisition now closed. They paid R232.2 million in cash and the rest in Lesaka shares, which tells you that the sellers believe in the combined story. One of those sellers happens to be African Rainbow Capital.

Adumo is South Africa’s largest independent payments processer and has been at it for over two decades. The beauty of a solid M&A strategy is that it accelerates a growth story tremendously. Nobody has the time or patience for Lesaka to try and build its own Adumo from scratch. Rather buy the thing and unlock the benefits of rolling it into a bigger group.

This is by no means Lesaka’s first acquisition. The group previously acquired Connect, Kazang and Touchsides. This is why the group talks about having a “connected ecosystem” in give countries.

Here’s an interesting nuance to the deal: due to a group of Adumo shareholders being unable to accept shares in Lesaka because of their investment mandates and Lesaka falling outside of the definition of what they are allowed to hold, Lesaka is repurchasing its shares to the value of R207.2 million from those investors. This means that the cash portion of the deal is effectively R439.4 million.

The Lesaka share price is up 23% this year.


Powerfleet completes Fleet Complete – now say it faster (JSE: PWR)

We have a new tongue twister

Powerfleet has closed the deal to acquire Fleet Complete with an effective date of 1 October. That’s a big step for them, with $15 million paid by the issuance of stock to a major seller and $60 million in cash funded by a private placement of stock. The remainder has been funded by a term loan facility with RMB.

The facility is for a term loan of $125 million. This is a bullet facility repayable after 5 years i.e. no capital is repaid until then. It bears interest at 5% per annum. Banks just love a deal structuring fee and this one is no different, with a $1.25 million fee payable as part of the package.


Nibbles:

  • Director dealings:
    • A variety of Adcock Ingram (JSE: AIP) directors sold shares received under share awards to the value of R27.6 million. The announcement doesn’t explicitly say that this is to cover taxes, so I assume that it isn’t.
    • A director of a subsidiary of AVI (JSE: AVI) received bonus shares and sold the whole lot for R737k.
    • The numbers are small, but it’s worth mentioning that several Anglo American (JSE: AGL) directors reinvested the interim dividend in shares.
  • Oando (JSE: OAO) has not met the previously communicated deadline of 30 September for its 2023 annual financial statement. They expect to file them by 23rd October,
  • Derek Cohen is stepping down as lead independent director of Octodec (JSE: OCT) for personal reasons. I usually ignore non-executive director changes, but lead independent is an important role. He will be replaced by Pieter Strydom, an existing independent non-executive director on the board.
  • Numeral (JSE: XII) has opened a Biotech subsidiary in South Africa to pursue acquisitions in that space. I don’t think I’ve ever seen a company announce that they’ve successfully registered a pty ltd, but I guess it’s about the small wins over there.

African auditors must seize the AI opportunity

We must invest to ride the wave that is transforming global auditing.

When it comes to technology, the early bird often misses out on the juiciest worm. Take the way in which Africa’s comically dire communications infrastructure, plagued by decades of non-investment, positioned it to leapfrog straight to mobile, unhampered by legacy investments in copper cabling that needed to be sweated.

While one wouldn’t recommend this as a strategy, a similar kind of serendipity gives the continent another opportunity to leverage the experience and insights of the developed world when it comes to using artificial intelligence (AI) in auditing.

At present, Africa’s auditing profession is immature when it comes to technology. One factor is that skilled human resources are typically cheaper relative than in more advanced economies, so it can seem to make sense to keep on with manual processes.

A second factor is the expense of investing in the new technologies – African auditors typically do not have the large IT budgets that their global peers do.

In truth, though, there is no option. As auditing globally becomes more proficient at using AI, and as AI itself approaches the Holy Grail of artificial generative intelligence (AGI, or AI that more closely resembles human intelligence), African auditors will have to follow suit. Their clients will demand it.

In addition, by using AI, auditors can do more with fewer people. AI enables even a small audit firm to process all the available data and to automate much of the work.

There is a lot of hype about AI in the business community, and it’s clear that companies see AI as a game changer. AI is thus receiving an increasing proportion of companies’ ICT spend, and this trend is particularly evident when it comes to the finance department. Gartner research shows that CFOs are planning to increase their technology spend largely thanks to the demand for AI. Ninety percent of respondents projected higher budgets, and none planned a reduction. They are particularly enthused about generative AI, which more closely mimics human intelligence.

IBM research indicates that CFOs are looking to AI to help them turn data into actionable insights, and help the finance workforce work more productively.

In tandem with these developments, it follows that CFOs and CEOs will increasingly expect their auditors to use AI effectively to deliver better value for money. Key expectations include audits that are more efficient, using fewer man hours and more accurate, and audits that do not just look backwards but that can predict trends.

While AI is by no means routinely used even in the developed world, but it is definitely being piloted by the majority of them. The Big Four auditors are already making massive AI investments, and the rest of the industry is following suit.

It’s a way off, but AI is on track to become as common as Excel spreadsheets in the finance world as a whole, including auditing. The revolution has already begun with Microsoft’s innovation of embedding its CoPilot AI app into Power BI. Now, finance teams will be able to summarise and identify trends in financial data using simple prompts.

African companies, and international companies with African offices, will come to insist that they get the same level of auditing excellence via AI as their competitors elsewhere in the globe.

Understanding the challenges

In short, the writing is on the wall. For African audit firms, the first step is to understand what their challenges are, and then to begin finding ways of overcoming them.

Budget. New technology is expensive, as a rule, exacerbated by the relative weakness of African currencies. For example, the inclusion of Copilot in most Microsoft applications makes better analysis of data much easier, but it costs around $30 per user per month. Similarly, workflow automation software can cost around €3,000 per licence. On the positive side, by keeping tabs on how global peers do it, African audit firms can avoid misallocating budgets to technologies that will ultimately prove to be disappointing.

Overall, African auditors should see AI as a long-term investment that will result in substantial savings and enhance their competitiveness.

Security. Large amounts of data will inevitably contain a great deal of sensitive data. Audit clients will rely on their auditors to have the right security protocols in place – another significant cost. Exposing sensitive client or company data on public AI platforms, for example, is a massive risk.

Skills shortages. While African talent will remain relatively less expensive than equivalent talent in the developed world, the specific skills needed for a more data-intensive, automated audit environment are in short supply everywhere. African audit firms will have to invest in growing their own timber.

For example, Forvis Mazars South Africa has invested in a data school that trains new graduates in software development and no/ low-code software, as well as the automation of continuous auditing.

Many of the bigger audit firms are undertaking similar initiatives, which will see more of these rare skills coming onto the market – a benefit to the industry and the ecosystems in which these firms operate. In fact, one could see potential for smaller firms to enter into formal agreements with the larger firms with their own training establishments.

There is a clear and present need to invest in AI but, as noted above, African firms can proceed cautiously with one eye on the experiences of more advanced companies outside of the continent. And, despite being competitors, there is a good argument to be made for the African auditing industry – or perhaps “ecosystem” would be a better term – to collaborate in the drive to build a bigger talent pool.

We became the mobile-first continent by accident; could we become the AI-first continent by design?

Ghost Wrap #81 (Nampak | Spar | Metair | Transaction Capital)

Listen to the show here:


The Ghost Wrap podcast is proudly brought to you by Forvis Mazars, a leading international audit, tax and advisory firm with a national footprint within South Africa. Visit the Forvis Mazars website for more information.

This episode covers:

  • Nampak and a pretty heroic turnaround for the balance sheet.
  • Spar’s troubles, including Switzerland as what could easily be the next major headache.
  • Metair’s balance sheet pressures and the need for the Turkish disposal to go through quickly.
  • Transaction Capital and the plan to focus on Nutun going forward, with the controlling stake in Mobalyz (SA Taxi) being sold.

Ghost Bites (ADvTECH | Capitec | Kibo Energy | Trencor)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:


ADvTECH is building a new university in Sandton (JSE: ADH)

Private tertiary education is growing at pace in South Africa

ADvTECH has announced some exciting news for its tertiary education division. The company has purchased a training and conference centre from FNB and will use the site to build a new university campus. The IIE’s Varsity College Sandton and Vega Bordeaux will relocate to the new campus ahead of the 2026 academic year, so they have a busy year ahead to get it ready.

There’s plenty of money earmarked for this, with a plan to invest R419 million over two years. The business case is that it will double student capacity from the current Varsity College and Vega campuses, with an offering spanning undergraduate to postgraduate qualifications.

Remember all those #FeesMustFall protests and how they severely disrupted the academic year for so many students? Like it or not, that’s one of the reasons why the private sector has a gap here. Parents aren’t so keen to pay for easily disrupted years and neither are students taking out student loans for their studies.


Extraordinary growth at Capitec (JSE: CPI)

How does a growth rate of 36% sound to you?

For a group the size of Capitec to be achieving growth in HEPS and the interim dividend of 36% is incredible. Return on equity has jumped from 24% to 29%, which means they are running at roughly double the level of some competitors.

The one metric that has worried me a bit is the cost-to-income ratio, which has moved from 38% to 41%. The trajectory needs to be managed carefully for Capitec to avoid becoming a lumbering giant like competitors, but 41% is still a great level. As a reminder, lower is better on that ratio. Operating expenses excluding the impact of the AvaFin acquisition grew by 24%, not least of all because of staff incentives to reward success. There are other major areas of investment, like a 36% increase in IT costs.

The major driver of this performance wasn’t just the net interest income growth of 20%, but also the 15% decrease in credit impairments. The net effect was a 72% jump in net interest income after credit impairments. Add on 22% growth in non-interest income (an excellent result in and of itself) and you end up with operating profit up by 41%.

On the business banking side, customer numbers increased by 31% over 12 months. They seem to be doing an excellent job of taking the lessons from the retail bank and rolling them out there, even if headline earnings in that segment fell by 12% as Capitec takes an aggressive approach to fees and winning market share. Here’s another data point for you: after launching a life cover product in June 2024, it contributed R8 million to the insurance result by the end of August.

Here’s a little reminder of what the best business success story of democratic South Africa looks like on a chart:

As a final point, the share price only closed 1.3% higher for the day despite this incredible set of numbers. Although Capitec had previously indicated that the numbers would be strong, it still tells you a lot about just how much is being priced in here.


Unsurprisingly, Kibo Energy is partially settling Riverfort with the shares in MED (JSE: KBO)

The mezzanine funding structure was always going to end like this

At some point, I remember writing that Kibo shareholders should be aware that the value in the group (what little there is) was heading directly to Riverfort as the mezzanine finance provider into the structure. The process has been accelerated by the planned reverse listing of assets into Kibo, with part of the outstanding balance of £463k to Riverfort being settled by the sale of Kibo’s remaining 19.25% interest in Mast Energy Developments (MED).

This takes the loan down to £343k, with the balance attracting interest at 10% per annum. It will be payable on the earlier of the listing suspension being lifted, completion of the reverse takeover or 31 March 2025. Kibo has the choice to settle the remainder in cash or shares.

All the value going forward is going to be in the new assets coming into the structure.


Trencor is looking at winding up during 2025 – if all goes well (JSE: TRE)

The cash shell has received dispensation to remain listed until 31 December 2025

Trencor is nothing more than a legal entity with a bunch of cash on the balance sheet and various legal relationships that need to run their course before the cash becomes available for distribution to shareholders.

The company expects to commence the winding up process as soon as practically possible after 31 December 2024. To buy time for this, they had to get a dispensation from the JSE to remain listed until 31 December 2025. This is not necessarily a guarantee that the winding up will be completed by then, so be cautious with that.


Nibbles:

  • Director dealings:
    • An associate of Christo Wiese loaded up on Brait (JSE: BAT) convertible bonds with a purchase price of £2.6 million (around R60 million).
    • A director of a major subsidiary of Oceana Holdings (JSE: OCE) has sold shares worth R688k.
    • Buried deep down in a Santam (JSE: SNT) announcement about share awards, we find a note that a director acquired shares worth R645k in an on-market trade (i.e. unrelated to the awards).
  • Pick n Pay (JSE: PIK) achieved all the shareholder approvals required to separately list Boxer on the JSE later this year. It remains a great pity that they intend to exclude retail investors from that opportunity, with only institutional investors able to participate in the placement at what will likely be an appealing price.
  • Vukile (JSE: VKE) has already announced the transaction that will see Castellana Properties acquire three shopping centre assets in Portugal. To make the deal happen, Vukile is lending €108 million to its subsidiary in two tranches. The tranche intended to be converted to equity is priced at 5.5% and the rest is at 7.75%. Both loans should be sorted out by the time that RMB Investments and Advisory becomes a 20% shareholder in the entity making the acquisition.
  • African Dawn Capital (JSE: ADW), which is currently suspended, announced that subsidiary Elite Group has attracted investment of R5 million from EXG Partners, as well as R15 million in the form of a long-term commercial loan. They aim to “revolutionise the credit industry” – I’m not sure how much of the revolution there will be with that balance sheet.
  • Pan African Resources (JSE: PAN) announced that Marileen Kok has been appointed as the Financial Director of the company. She has been with the company since January 2020, so this is an internal appointment which is always great to see.
  • Europa Metals (JSE: EMI) has scheduled the general meeting of shareholders for 25 October. This will be for the vote for the sale of the subsidiary EMI to Denarius Metals Corp.
  • OUTsurance Group (JSE: OUT) has received approval from the SARB for the special dividend of 40 cents per share.
  • Wesizwe Platinum (JSE: WEZ) advised that its financials are late but will be published before 14 October, so luckily they are only a couple of weeks off.
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