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19 November 2025: the last day that we could trust our eyes

Dominique Olivier
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19 November 2025: the last day that we could trust our eyes

A shift in AI has severed the link between images and reality. Now we’re left navigating a world where our eyes can’t keep up.

When I was a first year student at art school, there was a book that we were required to read and summarise. The name of that book was Ways of Seeing, and it was written in the wake of a BBC television programme of the same name by a British man named John Berger in 1972. 

(If you’re curious, you can see a part of the programme itself here)

Ways of Seeing is not a long book (the paperback copy I have in my bookshelf contains less than 200 pages), but it has cemented itself as one of those theoretical cornerstones for anyone who works in a visual medium – artists, designers, even architects. While the subject matter of most of the book is paintings, the points made by Berger, particularly in terms of the reproduction of images through photography, have remained relevant and useful for over half a century. 

Why am I telling you all this? Because less than a month ago, a subtle technological shift took place that will change the way that we look at images on the internet forever. 

Before this shift, it was still possible for us to use only our eyes to determine whether an image was real or generated by artificial intelligence. But with the launch of Google’s Nano Banana Pro on the 20th of November this year, the quality of AI-generated images has suddenly caught up to the real world. Very soon, we will be completely rid of the “tells” of AI-generated images – the overly soft, glowy lighting, the “too perfect” quality of skin and hair, the vaguely blurry backgrounds. Artificially generated images will inhabit our social media feeds, TV screens and our minds, undetected. And because we have always believed the things that we see, we will believe them too. 

What would John Berger say?

Sadly, the man himself passed away in 2017. This is a real shame, because I’m sure he could have added a fascinating epilogue to Ways of Seeing after witnessing the rise and proliferation of AI-gen images.

What we do have are the words he left us in his book:

“An image is a sight which has been recreated and reproduced. It is an appearance, or a set of appearances, which has been detached from the place and time in which it first made its appearance and preserved – for a few moments or a few centuries.”

This section is from a chapter of Ways of Seeing where Berger discusses the invention of photography and how the world changed when we started photographing things – artworks in particular. He goes on to make the point that artworks exist in one place and time. Before we were able to photograph Michelangelo’s David, you had to travel to Florence to see it in person; if you couldn’t make the trip in your lifetime, then you simply lived a life sans seeing that statue.

Now, the converse is true: you may spend your whole life seeing only photos of David instead of travelling to Florence to see it. You, the viewer, no longer travel to a place to see a thing. The thing now travels, in the form of a photograph, to you.

I felt this strange, almost disorienting sensation at the end of last year when I saw David in person for the first time in Florence. I’d encountered this statue’s likeness so many times in my life – textbooks, documentaries, postcards, memes – that I could probably sketch it from memory. Yet standing before it, I was struck by something I didn’t expect. The physical beauty and presence of the statue was undeniable, but that wasn’t what floored me. Instead, it was the shock of recognition: the realisation that every reproduction of this thing that I’d ever seen was anchored to this exact object, in this exact room. It was as if my brain needed a moment to confirm that this figure I’d carried around in my head for years actually existed, and that I was finally in its presence.

The first camera was invented in 1816. In the 1990s, we first experienced the internet. In the year 2000, we integrated cameras into our phones; in 2007, the first iPhone offered full internet connectivity in a handheld device. In just under 200 years, we have advanced from being able to create pictures to being able to create pictures anywhere we are, with a device the size of a hand, and then to publish those photos online for the world to see. Throughout this process, we have consistently understood and accepted the fact that the photograph – whether taken ourselves, received over WhatsApp or seen on Instagram – is a reproduction of a real thing that is out there in the world somewhere. Yes, photo manipulation was always possible, but even the most advanced Photoshop experts couldn’t invent whole photographs out of thin air. 

That is, they couldn’t. Until now. 

Upsides and downsides

Ask a business owner, and they will no doubt tell you that these technological advancements – many of which are free to access, within a certain scope and range of features – are saving them lots of money. 

Here is a practical example: a short while ago, I noticed that a local clothing brand that I have been a supporter of for years was using AI-generated models in images of their clothes. Can you imagine the amount of time, effort and money that is saved when a whole season’s collection can be uploaded to an image generator? Cancel the photoshoot, and you no longer have the expense of a photographer, editor, model (or models), make-up artist or hairstylist. You don’t have to rent studio space or travel. All of those savings, and the average customer probably wouldn’t even notice that the woman wearing the dress in the photo has that telltale AI hair. They’ll just see an attractive woman wearing a pretty dress and (hopefully) click Add To Cart. For a business owner, the decision to opt out of expensive human time and skill in exchange for free, good-enough-and-getting-better AI seems like a no-brainer. 

But herein lies the rub: the fact that this brand used to feature real, human models was the foundation of trust that allowed me, the online shopper, to purchase items of clothing that I couldn’t try on or see in person before purchase. With allowances made for Photoshop, I could believe within a reasonable level of doubt that the item of clothing I was seeing in the picture would fit as advertised. I could tell when a fabric was too stiff or clingy for my taste, or too sheer. I could compare my measurements to the measurements provided for the model and buy the correct size accordingly. 

Now, neither the model nor the dress are real. There is no way for me to judge the true fit of the item, because no-one is really wearing it. 

That foundation of trust in images expands beyond shopping online for clothes, and it will soon be crumbling everywhere. Photos of delicious-looking meals posted on the Instagram page of a restaurant you want to visit – real or AI? Images of a house you are interested in buying – real or AI? A brochure full of idyllic pictures, promising the perfect holiday destination – real or AI? Once that uncertainty takes root, the simple act of looking becomes a negotiation. We’re no longer judging quality, taste or desire – we’re first asking whether the image in front of us can be believed at all.

Back to Berger

John Berger wrote that an image is “a sight which has been recreated and reproduced” – a fragment lifted from reality and sent travelling across time. In the age of photography, that fragment always began with something that existed. Today, that chain has snapped. The fragment no longer needs a source.

As AI-generated images dissolve the boundary between what was and what was never there, we’re entering a new era of seeing – one where our eyes can no longer be trusted to verify the world. Berger taught us that images travel to us, detached from their time and place. Now they may arrive detached from reality itself.

If the photograph once brought the world closer, AI now brings us worlds that were never there. And if we accept those images uncritically, we risk losing the instinct that tells us what is real, what is fabricated, and what deserves our trust.

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. She now also writes a regular column for Daily Maverick.

Dominique can be reached on LinkedIn here.

Ghost Bites (Brimstone | British American Tobacco | Hyprop | Sappi | Stor-Age | Vodacom)

The Finance Ghost
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Ghost Bites (Brimstone | British American Tobacco | Hyprop | Sappi | Stor-Age | Vodacom)

Brimstone reduces exposure to Oceana (JSE: BRT | JSE: OCE)

Here’s a great example of “sell low”

Brimstone is an investment holding company that has a couple of key underlying stakes. One of them is Oceana, the fishing group that has had a difficult year after an excellent performance in the preceding year.

The correct time to sell an asset and reduce exposure is when it is doing well, not when it is doing badly. Sell high, not sell low. Sadly, Brimstone is reducing their stake in Oceana from 25.2% to 16.0% at the current depressed share price.

They are doing this to meet funding obligations, casting further doubt on the investment appeal of Brimstone’s model. When you need to sell listed stakes to deal with debt, you’re opening yourself up to the whims of market timing. And when your key stakes are in highly volatile industries, it’s even worse.

Here’s the real irony: because of the vast discount to intrinsic net asset value per share at which Brimstone trades, they would ironically be better off selling all their assets, settling all their debts and returning the residual capital to shareholders. This won’t happen though, so investors are forced to watch as the company sells R633.4 million worth of shares in Oceana right at the end of a difficult year for that company in which the share price is down 20% year-to-date.

British American Tobacco will unlock capital from hotels (JSE: BTI)

Yes, you read that correctly

British American Tobacco is sitting with a stake in ITC Hotels Limited, an R85 billion Indian hotel group that was demerged from ITC. British American Tobacco has been reducing its stake in ITC over time to unlock cash and use it to reduce debt. The decision to sell a big chunk of ITC Hotels isn’t a difficult one, as this is clearly a non-core and non-strategic asset.

They are looking to sell between 7% and 15.3% (their full stake) in the company, so that’s between R6 billion and R13 billion in shares! They will probably need to offload it at a discount, but that’s still the value of a JSE-listed mid-cap that will be unlocked through selling a random asset that was unbundled to them. It gives you a sense of scale at the top of the JSE pile, with British American Tobacco as an absolute giant.

British American Tobacco is targeting a net debt : adjusted EBITDA ratio of between 2x and 2.5x by the end of 2026. This will help them get there.

Hyprop shows us just how hot the REITS are right now (JSE: HYP)

We’ve very quickly moved into the realm of raises at a premium to VWAP

I thought it would take us much longer to get to this point, but I was wrong. The bunfight over REIT shares continues, with Hyprop taking full advantage of improved local sentiment, stronger retail conditions and ongoing decreases in SA bond yields. All of these conditions are great for property, which means that they are highly supportive of accelerated bookbuilds.

Hyprop announced that they would raise R300 million for a variety of development and potential acquisition purposes. The market jumped at it, with the offer being over 4x oversubscribed. This encouraged Hyprop to upsize the raise to R400 million, which means they’ve raised more than R1.2 billion this year.

But here’s the kicker: the raise was achieved at R54.50 per share, a 3.2% premium to the 30-day VWAP! Yes, it’s a 3.7% discount to the closing price on 3 December, but still.

I have a significant proportion of my portfolio in this sector, particularly in property ETFs in my tax-free savings account, where the fat REIT dividends come through without any tax deductions. This is something I wrote about quite a bit last year and spoke on earlier this year in podcasts. It’s been a good play!

Sappi hopes that a joint venture is the solution for the European graphic paper businesses (JSE: SAP)

The market liked it, with the share price up 10% on the day

Sappi is having a very difficult time at the moment. They are at an ugly point in the cycle and their balance sheet is tight thanks to recent capex. This is why the share price has lost more than half its value this year. For brave punters looking to play the cycles, this will be on their watchlists.

The share price closed over 10% higher on Thursday based on the news of Sappi implementing a joint venture in Europe for the graphic paper assets. They will work with UPM-Kymmene Corporation to combine Sappi’s European graphic paper assets with UPM’s communications paper business in Europe, the UK and the US. Essentially, this helps Sappi reduce exposure to European graphic paper and pick up some alternative exposure to other assets. The joint venture will be owned 50/50 by the two groups.

They reckon that synergies from the joint venture will be the suspiciously round number of at least €100 million per annum. They’ve even managed to include a very European-friendly paragraph about how this deal is good for the climate. But in reality, the graphic paper market is in structural decline and they are only too happy to share that burden with somebody else. There must be a reason why UPM is willing to share their assets, so this is in all likelihood a strategy of putting various weeds in a vase and calling them a bouquet.

It’s going to take a while to get the deal done, as agreements need to be signed in the first half of 2026 and the deal will hopefully close by the end of 2026. The pot of gold at the end of that rainbow is a cash receipt of €139 million by Sappi.

A circular will be distributed to shareholders in due course.

Stor-Age jumps on the capital raising bandwagon (JSE: SSS)

‘Tis the season!

If you’re looking for a festive drinking game, then knocking one back every time the words “accelerated bookbuild” go out on SENS just might do it this Dezemba. Stor-Age has now gotten involved in the action, announcing a raise of R500 million.

They talk about the raise being to support the 2030 target of expanding to 90 properties in South Africa and 70 properties in the UK. They also give an example of one specific deal, namely the acquisition of properties in KwaZulu-Natal for R95 million.

You know the market sentiment is positive when a company only needs to explain the exact use of barely 20% of the proceeds, with the rest going into the “trust me bro” corporate bucket. Luckily the market does trust Stor-Age, so they will likely have no difficulties in getting this raise done.

Vodacom invests deeper in Safaricom (JSE: VOD)

At R36 billion, this is an important deal

The telcos have been having a much better time of things in Africa this year. This is reflected in the sector share prices, with investors in Vodacom having enjoyed a share price return north of 30% this year.

With a more bullish outlook on Africa, Vodacom has moved to acquire an additional 20% in Safaricom, taking its shareholding to 55% and leading to the consolidation of Safaricom in Vodacom’s financials as it becomes a subsidiary.

The Government of Kenya is selling 15% and Vodafone is selling 5% to Vodacom. The total deal value is R36 billion, so this is a really meaty transaction.

There’s actually an additional layer to this deal, with Vodacom’s Kenyan subsidiary (87.5% held by Vodacom) agreeing to buy the future Safaricom dividends relating to the Government of Kenya’s remaining shares in Safaricom. They are buying these dividend rights for R5.3 billion.

Vodacom will fund the transactions to acquire 20% in Safaricom through debt raised from Vodafone. As for the purchase of the dividend rights, this will be funded by a facility in Kenya guaranteed by Vodacom.

This is a Category 2 transaction, so no shareholder opinion is required. Deloitte has been appointed as independent expert and has opined that the purchase consideration is fair to shareholders.

Nibbles:

  • Director dealings:
    • Are the original founders of Transaction Capital going to make a play for Nutun (JSE: NTU) and eat their own burnt cooking? They’ve consolidated their interests in Nutun company called Pilatucom Holdings, with the trio of Jonathan Jawno, Michael Mendelowitz and Roberto Rossi all having an equal stake. Aside from moving nearly R100 million worth of shares into Pilatucom, that company separately bought shares on the market worth nearly R76 million. A director of a major subsidiary also bought shares worth R13.3 million. The shares were bought at between 80 and 90 cents per share. Everything about this is screaming that the company is being primed for a buyout, with the shares closing 16% higher at R1.16 in response. Pilatucom now holds a 25.74% stake in the company. And even if not a buyout, that’s a strong show of faith!
    • The Vunani (JSE: VUN) CEO bought shares worth almost R70k.
    • A director of a major subsidiary of Stefanutti Stocks (JSE: SSK) bought shares worth R44.9k.
    • A director of Spear REIT (JSE: SEA) bought shares worth R38k.
  • Hosken Consolidated Investments (JSE: HCI) is selling its stake in a company that owns a shopping centre in Sea Point. The buyer is Steven Gottschalk, the founder of Value Logistics. The price? A cool R943 million! HCI holds just over 70% in the centre, so they are unlocking roughly R660 million before taxes and other costs. This will be used to reduce HCI’s debt and is part of the bigger push to offload the property assets in the group.
  • Labat Africa (JSE: LAB) is selling CannAfrica for R8 million, bringing to a close the cannabis and healthcare journey for Labat and leaving behind only the new IT assets that are actually rather interesting. The buyer is not a related party. As a result of this deal, Stanton Van Rooyen has stepped down from the board as well. The transformation of Labat Africa from cannabis to IT is almost complete.

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

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

Sappi and UPM-Kymmene Corporation have signed a non-binding Letter of Intent in relation to the possible formation of a joint venture for graphic paper in Europe. The Joint Venture will include the European graphic paper business of Sappi and the UPM Communications Paper Business in Europe, the UK and the USA. UPM is listed on the Nasdaq Helsinki stock exchange. The Joint Venture will be owned 50/50 by Sappi and UPM and will be operated initially as a non-listed independent company.

Hosken Consolidated Investments subsidiary, Permasolve Investments, has entered into an agreement to dispose of the rental enterprise conducted by it at erf 1141 Sea Point West in the City of Cape Town, Cape Division, Province of the Western Cape, trading as The Point Centre to Future Indefinite Investments 180 for R943 million.

Vodacom has announced that it has agreed to acquire an effective interest in 20% of the issued share capital of Safaricom Plc, for an aggregate consideration of US$2,1 billion (R36 billion), equivalent to KES34 per Safaricom share. The Acquisition is comprised of the following: Vodacom has agreed to acquire 12.5% of the issued shares in Vodafone Kenya (an effective 5% stake in Safaricom) from Vodafone International Holdings B.V for consideration of US$0,5 billion (R9 billion), resulting in Vodacom owning 100% of Vodafone Kenya. Vodacom, via Vodafone Kenya, has agreed to acquire 15% of the issued share capital of Safaricom from the Government of Kenya for a consideration of US$1.6 billion (R27 billion); and Vodafone Kenya has agreed to buy the right to receive future Safaricom dividends amounting to KES 55,7 billion (R7,4 billion), that would have accrued to the Government of Kenya on its remaining shares in Safaricom for an upfront payment of KES 40,2 billion (R5,3 billion).

Brimstone Investment has sold a 9.2% stake (11,950,000 shares) in Oceana Group to Marine Edge Capital for an undisclosed sum. Brimstone retains a 16% stake.

Raubex has issued a cautionary that it is assessing the possible disposal of all, or a portion of, its shareholding in Bauba Resources.

Thungela Resources – through its wholly owned subsidiary, Thungela Operations – will dispose of the Goedehoop North Mining Area Assets and Liabilities (including the Rapid Load-out Coal Terminal; the Coal Beneficiation Plant; the Surface Rights; the Mine Residue Dump; the Mining Rights and the Rehabilitation liabilities) to GHN Resources for R700 million excluding VAT.

Remgro has announced that it is in discussions with MSC Mediterranean Shipping Company SA through its wholly owned subsidiary Investment Holding Limited S.à.r.l (IHL) regarding a potential restructuring of interests in Mediclinic Holdings. As currently contemplated, the Potential Transaction would result in Remgro acquiring full ownership of Mediclinic Southern Africa and IHL acquiring full ownership of Hirslanden, being the Swiss operations of Mediclinic. The parties will then continue to hold their respective joint interests in the Middle East and Spire Healthcare Group plc businesses.

Unlisted Deals

Cape Town-based fintech Zazu, has raised US$1 million in pre-seed funding. This funding round saw participation from Plug and Play Ventures, as well as investors and fintech founders from Launch Africa Ventures, AUTO24.africa, Paymentology, Chari, Fiat Republic, and several founding members of European fintech unicorns like Qonto and Solarisbank.

NORDEN has acquired the cargo activities of Taylor Maritime in Southern Africa (previously operated under the IVS brand).  As part of the acquisition, NORDEN takes over the specialist parcelling team based in Durban, South Africa, headed by Brandon Paul, who together with his team will continue to service customers on parcel trades from South Africa.  The acquisition sum is undisclosed

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

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

DealMakers AFRICA

Global insurtech, bolttech Group, has announced that it has acquired mTek, a digital insurance platform based in Kenya. Founded in 2019, mTek has developed a best-in-class digital platform that enables customers in Kenya to compare, purchase, and manage insurance seamlessly. Financial terms of the deal were not disclosed.

Hamak Strategy, announced that it has entered into a Binding Term Sheet with UK registered private company, CAA Mining, which holds a purchase option with a private Ghanian company, Topago Mining, to acquire the highly prospective Akoko gold licence in Ghana. Hamak will pay CAA £20,000 for a 120-day exclusivity period to conclude technical and legal due diligence on Akoko. Subject to a successful outcome of the due diligence, Hamak will commit to spend a minimum of £500,000 on further exploration and confirmatory work at Akoko during 2026. Subject to satisfactory confirmatory work, Hamak will have the right to exercise its option any time prior to 14 December 2026 to purchase the Akoko licence via the CAA option with Topago through a payment of £50,000 cash to CAA, the issue of £1 million of new Hamak shares to CAA and the payment of US$1.9 million to Topago.

Rology, an Egyptian FDA 510(k) cleared AI-assisted teleradiology platform in the Middle East and Africa, has announced the successful closing of its growth funding round. The round includes participation from the Philips Foundation, Johnson & Johnson Impact Ventures, Sanofi Global Health Unit’s Impact Fund, and MIT Solve Innovation Future. Rology’s platform enables zero-setup cost, AI-accelerated diagnostic reporting across 12 radiology sub-specialties and 8 modalities, delivering reports in as little as 30 minutes. The undisclosed funding round follows on the company’s expansion in Saudi Arabia and steady growth in Kenya and other markets.

TSX-listed Montage Gold has announced that it will extend its Wet African footprint through the acquisition of all of the issued share capital of African Gold that it does not already own, by way of an Australian court-approved Scheme of Arrangement. African Gold holds the high-quality resource-stage Didievi project in Côte d’Ivoire. Montage is the current operator of the project and holds a 17.13% stake in African Gold. The deal is valued at approximately US$170 million.

Vodacom has announced that it has agreed to acquire an effective interest in 20% of the issued share capital of Safaricom Plc, for an aggregate consideration of US$2,1 billion, equivalent to KES34 per Safaricom share. The Acquisition is comprised of the following: Vodacom has agreed to acquire 12.5% of the issued shares in Vodafone Kenya (an effective 5% stake in Safaricom) from Vodafone International Holdings B.V for consideration of US$0,5 billion, resulting in Vodacom owning 100% of Vodafone Kenya. Vodacom, via Vodafone Kenya, has agreed to acquire 15% of the issued share capital of Safaricom from the Government of Kenya for a consideration of US$1,6 billion; and Vodafone Kenya has agreed to buy the right to receive future Safaricom dividends amounting to KES 55.7 billion, that would have accrued to the Government of Kenya on its remaining shares in Safaricom for an upfront payment of KES 40,2 billion.

On November 27, Tanga Cement listed the 127m new ordinary shares issued in the TZS204 billion Rights Issue that closed in October. This is the largest right issue to date in Tanzania and was 100% subscribed. The issue was priced at TZS1,600 per share at a ratio of two new shares for every 1 existing share held.

DEG has announced a long-term loan totalling €16.5 million to German horticultural company Selecta One, to fund the acquisition of Wagagai, a cutting farm in Uganda. Some of the funds will go to modernisation work at the farm. The acquisition enables the Wagagai farm, which employs over 2,000 people, to continue operating. Social initiatives will also be maintained. The initiatives include an on-site health centre, and educational and community work programmes. The Wagagai Health Centre was established in 2002, also funded by DEG.

In October, ASX-listed Predictive Discovery, a company focused on discovering and developing gold deposits within the Siguiri Basin, Guinea, and TSX and ASX-listed Robex Resources, which has assets in Mali and Guinea, announced a merger of equals whereby Predictive would acquire all the shares of Robex via a plan of arrangement whereby Robex shareholders would receive 8.667 Predictive shares for each Robex share held. The combined entity would be held 51% and 49% respectively by Predictive and Rebox shareholders. The merged entity would remain listed on the ASX and apply for a listing on the TSX. This week, Predictive announced that it had received a binding offer from Perseus Mining (also listed on the ASX and with gold mining assets in Ghana and Côte d’Ivoire) to acquire all of the issued shares in Predictive that it does not already own via an Australian scheme of arrangement. Perseus currently holds 17.8% of the Predictive ordinary shares outstanding. The binding offer of 0.1360 new Perseus shares for every 1 Predictive share, has been determined by the Predictive board to be a superior offer and have notified Robex of the offer and they have 5 working days to match or increase the offer. The Robex Matching Period expires on 10 December 2025.

The African Development Bank Group have approved up to XOF15 billion (€ 22,9 million) to support Phase II of Côte d’Ivoire’s Programme Électricité Pour Tous (PEPT). The financing includes up to €16 million from the Bank and up to €6,9 million from the Sustainable Energy Fund for Africa (SEFA). The transaction marks the first African Development Bank subscription to a local currency social bond in the West African Economic and Monetary Union (WAEMU) region. The project will finance 400,000 new electricity connections over 2025-2026, benefiting 2,2 million people, of which 35 percent live in rural communities.

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

The perils of oversimplifying technology due diligence in acquisitions

Rakhee Dullabh and Ridwaan Boda
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The perils of oversimplifying technology due diligence in acquisitions

Whether your company makes food, builds houses, manages logistics, sells products or provides services, your critical functions run on information technology. As such, it is no longer meaningful to draw a hard line between “tech” and “non-tech” businesses. In most businesses, sales and marketing depend on digital channels, operations rely on data and automation, finance sits on cloud platforms, and HR manages people through software. In practice, nearly every business is a technology business, and in transactions, technology should not be viewed as a side consideration – it is the engine of value and the source of risk. Yet in many acquisitions, especially by non-tech acquirers, technology due diligence remains dangerously superficial. Too many acquirers treat it as a checklist, while missing the deeper questions that determine whether a target’s technology is and can remain compliant, can scale, and can integrate easily, seamlessly and without undue expense.

IT as the business backbone

Modern enterprises are stitched together by technology. Cloud computing hosts enterprise applications; SaaS tools drive collaboration and CRM; mobile apps connect staff and customers; APIs integrate partners and supply chains. Even seemingly simple functions (like invoicing, timekeeping and customer support) operate on digital rails. The more essential these systems become, the greater the legal and operational exposure if they fail, are misused, or are implemented without appropriate governance.

What to consider in M&A deals

The traditional, superficial approach to technology due diligence is fraught with shortcomings and, given the reliance that a business places on technology as part of its day-to-day operations, a simple glance at technology contracts is insufficient for a company to mitigate the risks.

1. How clean is the target’s technology stack?

    Superficial diligence often stops at verifying that systems “work.” But functioning systems can conceal serious structural weaknesses. This, in turn, creates a myriad of risks, including integration paralysis (especially where the target has legacy and fragmented systems), vendor lock-in, hidden fragility, and valuation mismatch.

    2. Overlooking cyber and data risks

    Many acquirers still regard cybersecurity as an IT hygiene issue. In reality, it is a regulatory, financial and reputational risk zone, giving rise to issues such as inherited vulnerabilities, regulatory penalties, customer attrition (trust is easily lost by clients where cyber breaches occur), and operational disruption.

    3. Underestimating technical debt

    Every system carries “technical debt”, i.e. the accumulated shortcuts and legacy code that slow innovation and inflate maintenance costs. The risk to the acquirer includes unexpected capital expenditure, erosion of deal value (especially where high maintenance costs affect the EBITDA or end-of-support systems require replacement at significant cost), delayed synergies, and innovation bottlenecks.

    4. Ignoring intellectual property (IP) traps

    Technology value rests on ownership and control. Yet hurried diligence often stops at confirming that “the company owns its IP” and does not consider the hidden risks, such as unknown ownership claims (by staff or contractors), open source contamination, AI and data disputes, and jurisdictional misalignment.

    5. Misjudging integration and scalability

    A target’s systems may work well in isolation, but fail under the scale or compliance expectations of a larger enterprise. Most due diligence processes do not fully consider the risks in relation to integration costs, business disruption, compliance risks and cultural resistance.

    6. The false economy of “light touch” diligence

    Under deal pressure, acquirers often scale back on the diligence scope or timeline, especially on technology. This short-term saving often becomes long-term pain, especially where deal fatigue and distractions mean that hidden liabilities emerge after the deal is done, with an inability to renegotiate post-closing, resulting in reputational fallout.

    A strategic approach to due diligence

    Savvy acquirers are shifting from transactional to strategic technology diligence, treating it as a lens into capability, not just compliance. A well-structured technology due diligence mitigates key risks by assessing the architecture – which reveals scalability and technical debt before it becomes a capital burden – and the cybersecurity posture of the target, with a view to quantifying its exposure and defining remediation budgets pre-closing. It also assesses the data governance framework by identifying unlawful or high-risk data flows early; the intellectual property ownership position, ensuring that the target has clear title to all software, datasets, and AI models; integration readiness (including predicting real integration cost and time); and the technical leadership, in order to gauge whether the engineering culture can deliver on post-deal strategies.

    Changing perspective

    The ultimate goal of a well-structured and comprehensive technology due diligence is to transform the technology due diligence from a cost centre exercise into a predictive risk and value tool. Oversimplifying technology due diligence may save days on a timeline, but can cost years of recovery. In the digital era, the real liabilities are embedded not in balance sheets, but in codebases, data and dependencies.

    For any acquirer, understanding the target’s technology landscape is no longer optional. It is the difference between buying an asset that accelerates growth and inheriting a liability that erodes it.

    Boda is Head of Department and Dullabh an Executive: Technology, Media and Telecommunications | ENS

    This article first appeared in DealMakers, SA’s quarterly M&A publication.

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

    Assessing the risk of the culture to be acquired

    Lindy Taylor
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    Assessing the risk of the culture to be acquired

    Everyone enjoys a growth story, and mergers and acquisitions (M&A) often stand out as the fastest way to scale effectively. Whether it’s snapping up a competitor, expanding into new markets or acquiring new capabilities, the appeal of an M&A deal is clear. However, beneath the spreadsheets and legal jargon lies a major risk that is often overlooked: the company culture being acquired.

    Even the strongest financials, the best product fit, and the most promising synergy projections cannot compensate for a toxic culture. The 2025 Culture Killers Report by Cape Town-based consulting firm 5th Discipline surveyed 150+ professionals in South Africa’s fast-growing climate change sector, a sector attracting increasing investment. The report reveals that poor culture and weak leadership drive employee disengagement and turnover, which can severely undermine ROI. Disengaged employees are estimated to cost companies upwards of 30% of their salary in lost productivity and related expenses.

    South African M&A deals: the blind spot

    M&A due diligence tends to focus heavily on financials, legal compliance, and market position. The most successful and profitable dealmakers, however, also give serious attention to company culture, due to the risks and rewards created by the people within the organisation being acquired. The Culture Killers Report highlights that nearly 20% of employees struggle to face work daily because of toxic cultures. These toxic environments often lead to domino effects – one exit can set off multiple departures as team cohesion breaks down. The time to hire takes, on average, three months, which means businesses may be suffering a two-month inefficiency period between departures and replacements.

    Ironically, the harshest cultural critics are often those with long tenure and senior roles, who are precisely the key leadership and strategic talent buyers want to retain. This presents a significant risk to leadership value and organisational stability. Poor culture correlates with abysmal retention rates; nearly all employees in toxic environments leave within 15 months, while the average ROI on an employee is typically only realised between six to 12 months.

    Under these circumstances, acquisitions can appear less like lucrative investments and more like costly liabilities that drain resources.

    Money alone can’t fix culture

    A common response is to inject capital and appoint a new Chief Executive Officer (CEO) or managing director (MD) to lead the acquired firm, hoping new investment and fresh leadership will spark a turnaround. Yet the Culture Killers data reveals that almost half of employees identify poor communication, lack of motivation, leadership trust and insufficient coaching as major leadership failings. Without addressing these root causes, financial investment is unlikely to translate into productivity gains or improved talent retention, especially where new leaders do not have trust capital.

    Furthermore, replacing a CEO or MD alone does not necessarily solve cultural issues deeply embedded within the organisation. Entrenched behaviours, attitudes and feelings about the company persist far beyond leadership changes. It is entirely possible to invest millions yet lose the talented individuals and competitive edge that originally made the business valuable.

    Culture as a core due diligence metric

    For M&A to succeed from both strategic and commercial perspectives, culture due diligence must be as comprehensive as financial audits, as many cultural factors are quantifiable in monetary terms. This entails detailed evaluation of leadership styles, employee sentiment, communication clarity, 360-degree feedback, retention, absenteeism, hiring, and training data.

    The 5th Discipline report underscores that companies with engaged leaders and supportive cultures retain their talent longer. Nearly all respondents rating their culture 4/5 or higher reported strong retention beyond 15 months, which translates to three to nine months of additional ROI. Conversely, those who remain solely for compensation or job security tend to rate culture poorly and are more inclined to leave when better opportunities arise. Notably, pay and benefits were less commonly cited as reasons for leaving; the truth remains that people leave people.

    Practical steps for M&As

    Culture integration is notoriously complex, yet embedding cultural considerations throughout the M&A process can dramatically improve outcomes:

    • Culture audits: Beyond financial due diligence, asking employees what they tell friends about working at the company reveals important cultural insights. Third-party culture assessments encourage candid feedback and uncover gaps early.
    • Leadership assessment & investment: Conducting 360-degree reviews and online performance evaluations identifies leadership strengths and development needs.
    • Leadership enablement: Training leaders in emotional intelligence, effective communication and coaching enhances their ability to inspire and retain teams through transitions.
    • Alignment workshops: Facilitating sessions to unify teams around shared mission, values and operational practices fosters cohesion post-merger or acquisition.
    • Measurement & management: Setting clear KPIs linked to engagement, innovation, productivity and career development not only boosts retention, but aligns culture with business goals.
    • Transparent communication: Maintaining open channels about upcoming changes and providing forums for genuine feedback builds trust and reduces resistance.
    • Tailored integration plans: Recognising that culture cannot be “one-size-fits-all,” integration plans must adapt to different departments, experience levels and functions.

    The bottom line: culture drives profits

    Almost half of employees surveyed desire better communication and inspiring leadership, which the report identifies as essential for retention and productivity. Investing in these areas leads to lower recruitment costs, heightened engagement and improved returns – precisely what shareholders seek after a deal.

    Ignoring culture means embracing a high-risk investment where multi-million-rand acquisitions could backfire.

    For South African companies targeting significant ROI in renewable energy M&A, culture is not merely a “soft” factor or “PR buzzword”; it is a critical commercial lever. Collaborating with specialists who can transform culture data into practical, financially tangible strategies unlocks enduring impact, agility and market resilience.

    Before deciding to buy, merge, or invest capital in a net-zero economy business, it is essential to understand the culture being acquired, and ensure the readiness to lead, nurture, and invest in the people who will drive sustainable profits.

    Within South Africa’s evolving business landscape, mastering the culture equation is where authentic, lasting financial value begins.

    To access the report by 5th Discipline, follow this link: https://the5thdiscipline.com/home/access-the-culture-killers-report/

    Taylor is the CEO & Founder | 5th Discipline

    This article first appeared in DealMakers, SA’s quarterly M&A publication.

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

    Does regional integration increase M&A regulatory burden?

    Amalia Lui
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    Does regional integration increase M&A regulatory burden?

    This is a tricky topic, which has recently become increasingly important for entities which operate across multiple jurisdictions in Africa. Regional integration, in the form of the SADC, COMESA, EAC and AU (regional organisations), is meant to bring uniformity among the member states. The aim is to remove trade barriers, promote easy movement of labour, increase cross border investment and, in some cases, to facilitate easy access to capital for public and private entities, with better terms through financial institutions established and funded by the regional organisations. However, despite the benefits of regional integration, there is a challenge lurking behind the scenes, in the form of the M&A regulatory burden posed by the regional organisations.

    ANTI-TRUST AND MERGER APPROVALS

    Some African countries have national merger authorities (NMAs) which are responsible for merger approval processes, and each of these countries’ NMAs has unique key areas on which they focus. Historically, entities operating in multiple African countries would file merger approvals with the NMA in each of those countries. However, regional organisations are now focusing on becoming more integrated and uniform to prevent anti-competitive behaviour and monopoly across the continent, so merger approvals from the regional competition authority are increasingly required. Unfortunately, NMA approvals and local competition laws remain intact and do not cede to the regional competition authority, which means that M&A transactions are notified at both the NMA and regional organisation level. Trying to navigate the multiple regulatory hurdles contributes significantly to the regulatory burden, including time and cost.

    Arguments have been presented that national authorities should focus on the local policies, laws and economic impact of the transaction within the member state, while the relevant regional organisations should focus on the impact across multiple African countries. While this argument is valid, there should be proper integration and uniformity, where each NMA is entrusted with the duty to focus not only on its own market, but also on how the M&A transaction affects the member states of the regional organisation. Alternatively, the NMA should cede control to the relevant regional organisation to make such analysis, with internal dialogue and correspondences between the regional organisation and the NMA to avoid multiple filings.

    REGULATORY APPROVALS

    Aside from the anti-competition approvals, there may be lack of support or uniformity by regional organisations when it comes to regulatory approvals across multiple jurisdictions on the continent. Some jurisdictions have simpler regulatory controls, while others impose more stringent requirements. These can include free carry in favour of the member state, and/or mandatory local ownership requirements to qualify for the granting of some permits/licences or approvals. It becomes a challenge for businesses to navigate different regulatory approval requirements across each of these jurisdictions, which then hinders cross border investment and the easy flow of capital between member states. With regional organisations pushing for more integration and uniformity, this aspect must be investigated, especially for businesses which have attained an agreed threshold to qualify for merger approval with the regional competition authority.

    DIVERGENT TAX REGIMES

    The inconsistency of tax frameworks across member states belonging to the same regional organisation calls for harmonisation. These inconsistencies range from withholding tax obligations, rates and accrual, capital gains tax rates and assessment mechanisms, and VAT frameworks, among others. Ultimately, M&A transactions have to comply with the tax laws of each jurisdiction, but in some instances, approvals and implementation timeframes differ significantly from one member state to another. Overall, this impacts the confidence of investors seeking entry into the continent. In addition, it affects the financial support from external financiers, since the continent still largely depends on financing from non-African financial institutions and banks.

    Regional integration should unlock growth, not entrench fragmentation. Aligning competition, regulatory and tax laws, policies and systems should be a priority. It is the key to turning Africa’s economic blocs into engines of cross-border investment. It should make us more competitive and reduce the hurdles of investment across member states, whether emanating from within or from outside the continent.

    Lui is a Partner | Clyde & Co (Tanzania)

    This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

    DealMakers AFRICA is a quarterly M&A publication
    www.dealmakersafrica.com

    Private Equity and Wheeling: financing the shift to decentralised power

    Nomsa Sibanyoni and Khanyisile Malebe
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    Private Equity and Wheeling: financing the shift to decentralised power

    Africa’s energy story is undergoing a fundamental shift in 2025, as c.600 million Africans lack access to electricity. Rolling blackouts, rising tariffs and strained utilities have forced commercial institutes to look for alternatives, while investors are searching for sustainable, long-term returns. At the centre of this intersection sits wheeling, which allows independent power producers (IPPs) to deliver electricity directly to commercial institutes through the grid. For private equity, wheeling offers more than just a niche investment play. It represents a scalable platform for financing decentralised power, while giving customers reliable, typically cleaner, energy that bypasses overburdened state utilities.


    THE POWER OF WHEELING

    Wheeling can be explained as an IPP “wheeling” electricity that it has generated across the existing grid to a consumer, even if the two are not physically connected. Contracts and network charges govern the transaction, making it possible for commercial institutes to secure renewable supply without having to build their own dedicated infrastructure.


    FROM DARK TO DAWN


    African private sector clean energy investments surged to nearly US$40 billion in 2024, with solar capacity alone exceeding 20 gigawatts, and over 10 gigawatts under construction, primarily driven by Southern Africa.
    South Africa’s power story is one of both crisis and innovation. In the late 1990s, South Africa undertook one of the world’s fastest electrification drives, where roughly 2,5 million households were provided access to electricity. When Eskom’s debt burden and rising tariffs collided with surging demand in the early 2000s, the system fell into crisis. By 2007, load shedding had become a national reality, forcing the government and businesses alike to rethink the centralised utility model.


    The introduction of IPPs in 2012 was a turning point in South Africa’s energy transformation journey. IPPs eased pressure on Eskom, while proving that decentralised energy could be both viable and scalable. Today, wheeling takes that shift further by allowing commercial institutes to secure power directly from IPPs, reducing dependence on Eskom while accelerating the transition to cleaner energy.


    In May 2025, the National Energy Regulator of South Africa established a framework for third-party wheeling that includes rules that standardise how network charges for wheeling are set and collected. By clarifying network charge methodology and access, the rules make wheeling commercially predictable, encouraging more competition and renewable investment.


    For commercial institutes – which are generally the continent’s heaviest consumers of electricity – wheeling is more than an energy hedge, and this is perfectly illustrated by Vodacom’s pioneering virtual wheeling deal with SOLA Group. By securing renewable power through a PPA, Vodacom not only reduced its reliance on Eskom, but also set a blueprint for other companies to follow.
    Investec’s award of an electricity trading licence by the National Energy Regulator of South Africa also represents a significant milestone in the country’s evolving energy landscape. The bank will be partnering with IPPs and facilitating structured funding, offtake arrangements and wheeling solutions.


    The decentralised energy model is also gaining traction beyond South Africa. Kenya’s 2019 Energy Act, reinforced by the 2024 regulations, now enables large consumers to contract directly with IPPs. Eligible commercial institutes consuming more than 1 MVA can soon bypass Kenya Power, opening the door to a competitive open-access energy market. Zambia, Morocco and Egypt are also advancing frameworks that could make wheeling a mainstream option.
    The overall benefit of wheeling is significant, with commercial institutes gaining cleaner, reliable power, while IPPs secure bankable off-takers. For investors, particularly in private equity, wheeling creates a pipeline of long-term, creditworthy deals that align with both returns and sustainability mandates.
    Wheeling plays a pivotal role in advancing ESG objectives by supporting Africa’s transition to low-carbon, sustainable energy. Its cost-effective nature enables broader, affordable access to clean power, helping reduce emissions while improving energy equity. This model delivers both environmental impact and socio-economic upliftment, creating long-term value for communities and investors. In short, wheeling matters because it transforms Africa’s power challenge into an investment and growth opportunity.


    The next frontier for private equity in Africa lies in building regional renewable energy platforms that combine generation, storage and digital innovation. Infrastructure outside South Africa may also be required. These integrated solutions, anchored by bankable corporate off-takers, represent the convergence of infrastructure, finance and technology.


    How is Private Equity closing the gap?


    Private equity investors are already positioning themselves as catalysts in this space. Their participation typically takes four forms:


    • Platform aggregation: bundling smaller PPAs into investment-grade portfolios that attract institutional capital. One example is Discovery Green, a renewable energy platform that enables electricity wheeling while unlocking access to clean, affordable power at scale.


    • Infrastructure funds: acquiring or building IPPs and backing construction of new renewable projects tied to wheeling agreements.


    • Fintech solutions: enabling smaller commercial institutes to access flexible financing structures, as they may not be able to commit to long-term PPAs.


    • Storage investments: adding batteries and smart control systems to projects, improving reliability and making portfolios bankable.


    Each of these approaches strengthens the investment case, aligns with ESG mandates, and builds resilience into Africa’s decentralised power ecosystem.


    Risks, mitigants and deal considerations


    Although the involvement of private equity investors presents opportunities, investors may face a number of key risks. These risks include tariffs and other regulatory requirements differing across jurisdictions, and technical issues such as congestion and location mismatches, in addition to the usual commercial risks. Battery storage can help to reduce some risks, alongside hedging, which can provide financial protection for price and currency fluctuations.


    Wheeling is more than a technical mechanism; it is a bridge between Africa’s power deficit and its investment opportunity. For commercial institutes, it secures cleaner, more reliable supply. For IPPs, it creates direct demand. And for private equity, it offers a scalable play at the intersection of infrastructure, energy transition and corporate finance. As regulators refine frameworks and commercial institutes demand sustainable power, private equity’s role will only deepen.


    Sibanyoni and Malebe are Corporate Financiers | PSG Capital

    This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

    DealMakers AFRICA is a quarterly M&A publication
    www.dealmakersafrica.com

    References: 

    1. https://www.eskom.co.za/heritage/history-in-decades/eskom-2003-2012/
    2. https://www.eskom.co.za/distribution/tariffs-and-charges/wheeling/#Why-wheeling
    3. https://energy-news-network.com/industry-news/vodacoms-pioneering-virtual-wheeling-solution-goes-live-in-south-africa/?utm
    4. https://efficacynews.africa/2025/06/19/africas-power-sector-transforms-as-kenya-zambia-and-south-africa-embrace-open-access-energy-markets/?utm

    5. https://empowerafrica.com/africa-by-the-numbers-600-million-africans-still-lack-electricity-2024/
    6. https://www.pv-magazine.com/2025/08/11/africas-solar-capacity-surpasses-20-gw/
    7. https://www.investec.com/en_za/welcome-to-investec/press/investec-granted-energy-trading-licence-by-nersa.html
    8. https://www.discovery.co.za/business/discovery-green

    Ghost Bites (Araxi | Glencore | Hyprop | Nedbank | Raubex | Sabvest)

    The Finance Ghost
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    Ghost Bites (Araxi | Glencore | Hyprop | Nedbank | Raubex | Sabvest)

    Araxi might be expanding in the payments space (JSE: AXX)

    This is certainly the part of the business that they should be focusing on

    Earlier this week, we saw results from Araxi (previously Capital Appreciation) that highlighted the huge gap in performance between the Payments segment and the Software segment. My view is that they should be getting out of Software and just focusing on what they are really good at – Payments!

    We don’t seem to be at that point yet, but the company has released a cautionary announcement based on negotiations for a potential acquisition of a “meaningful payment services business” – and that sounds like the right sort of thing for them to be focusing on.

    With an unencumbered balance sheet and over R300 million in cash as an acquisition war chest, they are in a strong position to be able to do a smart deal. Now we have to wait and see exactly what that deal is, assuming something actually materialises after this cautionary. Remember, there’s no guarantee of a deal being announced.

    Copper was the focus at Glencore’s Capital Markets Day (JSE: GLN)

    The goal is to become one of the largest copper producers in the world

    Here’s some festive 2025 relationship advice: find someone who looks at you the way the mining sector looks at copper. The bunfight over this commodity has been quite something to watch, with the biggest balance sheets in the game being positioned for copper expansion strategies. If there’s any disappointment in demand vs. current expectations, it’s going to get nasty.

    At Glencore’s Capital Markets Day, the headline story was a plan to significantly increase copper production and become one of the largest copper producers in the world over the next decade. Here’s a useful slide on why copper is the belle of the ball at the moment:

    Interestingly, Argentina is where the action is happening for them, with other South American territories like Peru and Chile featuring as well. They expect copper volumes to achieve a compound annual growth rate (CAGR) of 9.4% from 2026 to 2029, while total group production measured on a copper equivalent production basis will have a CAGR of 4.0%. In other words, copper itself will increase a lot faster than the other metals.

    Although they expect copper to self-fund its growth pipeline, it doesn’t hurt to have the cash-generative coal and other assets to support the group. They’ve also achieved a more efficient group thanks to identified cost-saving opportunities worth $1 billion a year across 300 initiatives. They expect to fully deliver these savings by 2026, with half already locked in for 2025.

    Glencore has also been on a drive to simplify the portfolio, with approximately 35 assets either sold or shut since 2021 and $6.3 billion raised from key disposals. They talk about having eliminated around 1,000 roles through a new operating structure. This is clearly where a big chunk of cost savings have come from.

    The full presentation is obviously filled with fascinating details about Glencore and the broader sector. If you’re keen to take a look, you’ll find it here.

    Hyprop taps the market for R300 million (JSE: HYP)

    The capital raises are picking up in the REIT sector

    Hot on the heels of a raise at sector peer Equites Property Fund (JSE: EQU), we now have Hyprop with an accelerated bookbuild. At least they are telling us how much they actually want, in this case R300 million to add to the R808 million raised earlier this year. That’s more than a billion rand of fresh equity this year!

    In terms of the planned use of funds, Hyprop has found a balance between vague explanations and some specifics. There’s the usual “growth pipeline and potential acquisitions” comment that basically lets them do anything, accompanied by references to some specific capex projects like the Somerset Mall extension and a food court upgrade in Canal Walk, along with solar projects in the local portfolio.

    In short, they are tapping a hot market for more equity capital. The timing is good and we are going to see more of this in the REIT sector.

    Importantly, the guidance for growth in distributable income per share of 10% to 12% for the year ended June 2026 is unchanged by the raise.

    It’s been a rough year for Nedbank investors (JSE: NED)

    There wasn’t much growth even before the Transnet settlement

    Sometimes, underperformance is so stark that a share price heads in a completely different direction to the peer group. In this year-to-date chart, it’s unfortunately the bank with the green logo, Nedbank, that is the only one in the red:

    This isn’t entirely due to the settlement with Transnet for R600 million. The market is smarter than that, as Nedbank’s market cap is currently over R120 billion. The settlement is therefore just 0.5% of the market cap.

    No, this underperformance is thanks to Nedbank posting weak growth numbers despite this being a strong year for the South African economy. If they can’t achieve meaningful growth in this period, then what chances do they have when the cycle gets tough again?

    A pre-close update that deals with the 10 months to October shows the disappointment that shareholders have had to stomach. Net interest income (NII) grew by low-to-mid single digits, which is better than the tepid 2% growth in the six months to June 2025. Interest rate decreases obviously put pressure on this number, but Nedbank also has weak margins vs. some of its peers. At least the credit loss ratio is in a decent place, below the midpoint of the through-the-cycle target range of 60 basis points to 100 basis points.

    Non-interest revenue (NIR) growth is the really poor story, sitting below mid-single digits. You cannot boost return on equity as a bank if you can’t grow your NIR at a meaningful rate above inflation.

    To add to the problems, expenses grew by mid-to-upper single digits for the period, which means it increased faster than NII and certainly NIR. This is negative jaws territory (as they call it in banking), with margins going the wrong way.

    These numbers exclude the Transnet settlement, as does the guidance for the full year of diluted HEPS growth being in a range of flat to low-single digits. Return on equity is expected to be 15% or higher.

    Probably the only highlight here is the share repurchases of R2.4 billion year-to-date. But this is taken into account in the HEPS guidance, so things are still far from exciting.

    Nedbank desperately needs to inject some life into its story. Their acquisition of fintech iKhokha was approved by the Competition Commission and closed on 1 December. Their sale of Ecobank to Bosquet is awaiting regulatory approvals across various divisions. They’ve also made some divisional management changes.

    In the absence of any meaningful progress though, Nedbank has proven to be a value trap this year i.e. “cheap” for a reason.

    Raubex has made it explicit: they are looking to sell Bauba Resources (JSE: RBX)

    Here is yet another example of M&A being reversed down the line

    Back in 2022, Raubex went through a mandatory offer process (i.e. they deliberately triggered the 35% ownership threshold) to acquire Bauba Resources. This was a dicey strategic fit from the start, as it brought mining risks into a group that already faces plenty of cyclical risks from construction, infrastructure and other key exposures – including other mining clients!

    Just three years later, the usual fate for poorly conceived deals is about to play out: Raubex is now looking for a buyer for Bauba Resources. It’s the right call, as being stubborn about not sorting out the problem doesn’t help anyone. If anything, it’s just example number five zillion of why M&A should always be treated with caution.

    This move was well telegraphed in the latest set of results, with Raubex making it clear that they were “evaluating the long-term strategic direction” of the business. That’s just fancy corporate speak for “we probably need to sell this thing” – and quickly.

    At this stage, all they’ve done is appoint an advisor to help them assess strategic options and find a potential buyer. There’s no guarantee of a transaction going ahead, even if there’s a “for sale” sign hanging over the door. If they do find a buyer, it’s going to be very interesting to compare the selling price to the 2022 acquisition price.

    Lovely growth numbers at Sabvest (JSE: SBP)

    This is one of the best local investment holding companies

    Sabvest has a strong reputation for capital allocation skills and returns generated for shareholders. They’ve been around for a long time and the track record speaks for itself.

    There will be good years and bad years of course, but the year ending December 2025 will go down as a great year. In a trading statement for the period, they highlighted NAV per share growth of between 18% and 25%, along with an expected jump in the dividend per share of between 19% and 24%.

    The share price reflects this momentum, up 36% year-to-date.

    Nibbles:

    • Director dealings:
      • The current CFO of Growthpoint (JSE: GRT), who is retiring early next year, has sold shares worth nearly R1.3 million.
      • The CEO of Spear REIT (JSE: SEA) bought shares for direct family members worth R92k.
      • An associate of the CEO of Grand Parade Investments (JSE: GPI) bought shares worth R29.6k.
      • An associate of a director of South Ocean Holdings (JSE: SOH) bought shares worth R20.7k.
    • Omnia (JSE: OMN) participated at the Absa Corporate Summit and has made the presentation available here. It’s a goodie to work through if you want to get to grips with the company.
    • Here’s some encouraging news for the Altvest Credit Opportunities Fund (JSE: BACC), by far the best part of Africa Bitcoin Corporation (JSE: BAC). The fund has placed notes worth R50 million under the R5 billion Domestic Medium Term Note Programme. They need to keep scaling that thing and scale requires capital.
    • Will PSV Holdings (JSE: PSV) come back from the dead? There’s been a lot of effort to try and make this happen, with DNG Energy working to get the company out of liquidation and suitable for status as a listed company once more. The latest update is that the liquidator has requested a motivated Section 155 Scheme of Arrangement (essentially a compromise with creditors). This is expected to be received in December.

    Ghost Bites (Araxi | Equites Property Fund | Exxaro | FirstRand | Merafe | Resilient | Shaftesbury | Sibanye-Stillwater)

    The Finance Ghost
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    Ghost Bites (Araxi | Equites Property Fund | Exxaro | FirstRand | Merafe | Resilient | Shaftesbury | Sibanye-Stillwater)

    Araxi (previously Capital Appreciation) has released interim results (JSE: AXX)

    The Software business continues to drag everything down

    Araxi’s results for the six months ended September 2025 have been impacted by accounting restatements. There are a number of restatements that ended up boosting earnings per share in the prior year without having much of an impact on the balance sheet or the cash flow statement. This means that the base period has created a much more demanding profit number off which to grow. Accounting restatements exist for a reason, as the idea is to improve comparability by ensuring that the policies are applied to both periods being presented.

    Araxi is keen for you to use normalised earnings growth instead of reported earnings growth. In making these normalisation adjustments, they take out the recognition of a licence fee as well as the restructuring costs in the Software division. Normalised HEPS growth is a meaty 58%, while growth in HEPS as reported was just 1.8%. That’s a huge gap that would require high conviction to be okay with.

    Group revenue was up by just 2.3%, so that’s the first concern in the context of this high normalised growth number. Group EBITDA was up just 0.4%. As final evidence, we can just look at the dividend growth – or lack thereof, in this case. The dividend is flat at 4.5 cents per share. As you can probably tell by now, I’m not sure that the normalised growth is any indication at all of “normal” growth in the business, but time will tell.

    We can now dig into the segments. The Payments division is doing really well, with revenue up 23.2% and EBITDA up 33.1% to R184.3 million. Software continues to be a catastrophe, with revenue down 20.2% and EBITDA crashing 82.7% to just R6.9 million. The Payments division has an EBITDA margin of 47.6% and Software sits at 2.7%. The very best thing they could do is get rid of the Software business and focus on what investors are actually interested in: Payments.

    There’s seems to be no desire to do this though, with management promising that the restructuring activities in Software will deliver annualised cost savings of R35 million to R40 million that weren’t visible in the first half because of once-off restructuring costs. Fair enough, we will wait and see what the second half looks like. But the underlying story is what it is – the Payments business is a lucrative, dependable asset and the Software business looks incapable of attracting a high valuation multiple.

    The group is well known for having no debt. In fact, they have over R300 million available for growth. In the context of a market cap of R2.2 billion, that’s a significant cash pile.

    Equites Property Fund raised over R700 million for local development opportunities (JSE: EQU)

    The market seems unbothered by the slow exit from the UK

    As I wrote about earlier this week, Equites announced what I think could be referred to as a “bland accelerated bookbuild” – a capital raise with few or no underlying details. Sure, they’ve given a general idea of the local development opportunities in a separate trading update, but they didn’t even tell the market how much they were planning to raise and which projects would be prioritised!

    None of it seems to matter, as the sun is shining in the property sector and so institutional investors are literally falling over one other to throw capital at listed funds. Equites raised R712 million at a discount of just 1.32% to the 30-day VWAP.

    The good times are here for the REITs. You can expect to see more and more bookbuilds. And somewhere in the next 12 – 24 months, it’s probably going to get silly enough that I will rotate my exposure away from the sector. You only have to look at the charts a decade ago to see how the cycle plays out.

    Exxaro is likely to slightly miss their full-year guidance (JSE: EXX)

    Local coal sales (excluding Eskom) were disappointing

    Exxaro released a pre-close message for the year ending December 2025. With a significant decline in coal export prices having been suffered this year, it hasn’t been an easy year. Despite this, Exxaro reported strong earnings growth at the halfway mark in the year and the share price is up 8% year-to-date.

    Total coal volumes are expected to be in line with the prior year, which means that they expect to miss guidance for the year by 3%. The biggest miss was in domestic coal sales other than to Eskom. Coal capex is expected to be around 3% higher than guidance, so the combined impact suggests that they will probably disappoint the market with full-year free cash flow numbers. It will of course depend on what the full-year costs look like.

    In corporate news, the majority of the key suspensive conditions for the acquisition of manganese assets from Ntsimbintle Holdings and OMH Mauritius have been fulfilled. There are only a few conditions still to be met.

    FirstRand’s guidance is intact – excluding the UK motor finance industry mess (JSE: FSR)

    The battle with the UK regulatory is far from over

    FirstRand released a voluntary trading update for the six months ending December 2025. They are performing in line with expectations, with the guidance of full-year growth of “high mid-teens” still intact. They also expect normalised ROE to move closer to the upper end of the stated range of 18% to 22%.

    Although interest rates have come down, net interest income has grown thanks to the positive impact on margin from strategies to drive attractive growth in advances across South Africa, the rest of Africa and the UK. They expect to see improvement in absolute advances in the corporate business second half of the year, so this is mainly a margin story for now in that book. In the retail and commercial books, there has been an increase in activity.

    Non-interest revenue, a key source of ROE, is up on the previous financial year and showing strong momentum in areas like insurance and global markets, boosted by private equity deals.

    The credit quality looks solid, with the credit loss ratio at the bottom end of the through-the-cycle range.

    In terms of expenses, growth is 2% to 3% above inflation. Aside from negotiated salary increases, my observation across the financial services names is that technology spend runs well above inflation.

    All of this good news excludes the provision for the UK motor commission matter. The FCA’s final redress scheme is seen by FirstRand as going beyond what is fair. It sounds like the scheme would lead to the loss of more than the cumulative profits made over the period by the group.

    In summary: FirstRand is doing well, but this irritating overhang isn’t going anywhere just yet.

    Merafe moves ahead with closing the Wonderkop and Boshoek smelters (JSE: MRF)

    Energy prices mean that these smelters just aren’t viable

    Merafe has been working with Eskom to try and find a solution to the crisis facing the Boshoek and Wonderkop smelters. Although a proposal was received at the end of November, it just isn’t enough to save these operations. The silver lining is that it does create a future for the Lion smelter, so not all is lost.

    This doesn’t help the employees of Boshoek and Wonderkop of course. The Merafe – Glencore (JSE: GLN) joint venture has issued retrenchment notices to the employees of these two smelters. They will both be placed on care and maintenance from 1 January 2026.

    Resilient flags double-digit distribution growth (JSE: RES)

    The positive sentiment in the property sector continues

    Resilient REIT has released a pre-close update for the year ending December 2025. The expected growth in the distribution per share is at least 10%, so that’s a great data point to show just how strong this year has been for the property sector.

    The focus on retail property has been valuable, with retail sales up 5.6% for the 10 months to October. Both renewals and new leases have shown positive reversions, coming in at a blended increase of 6.3%. Escalations on the leases are running between 5.4% and 5.7%, so that’s good inflation protection.

    To add to the happy news, the extensive renewable energy installation programme has led to Resilient being able to generate 39.8% of its own energy requirements. Load shedding may feel like a bad nightmare now rather than a daily reality, but the benefit of this strategy goes well beyond energy security. Based on the cost of power from Eskom, there’s an attractive yield associated with these projects.

    The European exposure – Spain / France and Lighthouse Properties (JSE: LTE) – is also performing well.

    When you layer on the benefit of reducing interest rates, you find yourself having a particularly good time with a story like this. Double-digit growth in the distribution per share is really impressive!

    London’s West End continues to perform for Shaftesbury (JSE: SHC)

    Positive reversions are the order of the day

    Shaftesbury released a trading update covering 1 July to 31 October. The fund is focused on London, so this represents the back-end of summer and then the pre-Black Friday and festive season period.

    Leasing activity has been strong, with recent transactions running 4.3% ahead of the June 2025 estimated rental value (ERV) and 10% ahead of the previous passing rents. Occupancies are strong, with only 2.6% of the portfolio available to let.

    There’s no shortage of asset management and refurbishment initiatives underway, with around 4.1% of the portfolio ERV currently being worked on. This is being supported by a balance sheet in great shape, with the loan-to-value at 17%.

    Sibanye-Stillwater announces a three-year wage deal in the gold operations (JSE: SSW)

    This is great news for the business

    With the gold price continuing to do wonderful things for the industry and for our country, I’m pleased to see that Sibanye-Stillwater has reached a deal with AMCU, NUM, UASA and Solidarity regarding wages. The unions have a history of obliterating investor sentiment in the local mining industry, but those days are hopefully behind us now.

    The agreement covers July 2025 to June 2028, with an increase that works out to roughly 5.4% per annum. The exact increase varies by category of employee.

    This seems like a fair increase that is above the inflation band being targeted by the SARB. Now the gold price just needs to keep behaving itself!

    Nibbles:

    • Director dealings:
      • A director of Impala Platinum (JSE: IMP) sold shares worth R11.8 million.
      • A director of Momentum (JSE: MTM) bought shares worth R180k.
      • An associate of a director of Spear REIT (JSE: SEA) bought shares worth R85k.
      • An associate of a director of South Ocean Holdings (JSE: SOH) bought shares worth R11.5k.
    • Paul Mann has recovered from what I’m sure was the world’s most frustrating post-op process of being unable to travel. This means that he has returned as Executive Chairman and CEO of ASP Isotopes (JSE: ISO). Robert Ainscow will return to the COO role. There’s a lot going on at the company and it’s good to see them back at full strength.
    • Italtile (JSE: ITE) CEO Lance Foxcroft is stepping down from the role due to “increased family commitments” – interesting. He will instead run Ceramic Industries, the segment he previously ran. Given the huge supply and demand imbalance plaguing that manufacturing business, I can’t see it being a much less demanding job than group CEO. Brandon Wood, currently the Group COO, has been appointed as CEO Designate. He’s previously been the Group CFO as well, so there’s no shortage of bench strength here. He will formally take on the CEO position on 1 July 2026.
    • Spear REIT (JSE: SEA) announced that the acquisition of Consani Industrial Park for R437.3 million has been implemented and the property transferred on 2 December. The loan-to-value ratio is between 26% and 27%. Spear’s gross portfolio asset value is now up to R6.8 billion.
    • MTN Zakhele Futhi (JSE: MTNZF) has distributed the circular to shareholders that deals with the final steps in the dance to wind up the scheme and return the residual value to shareholders.
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