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How Thomas Edison accidentally created Hollywood

Dominique Olivier
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How Thomas Edison accidentally created Hollywood

Thomas Edison wanted to own American film. Instead, through essentially operating a cartel, he drove it 5,000 kilometres west and gave the world Hollywood.

In 1886, a devout couple from Kansas bought 49 hectares of farmland northwest of Los Angeles and named it Hollywood. Their dream was to grow figs and build a sober, God-fearing community of like-minded Christians. It is one of history’s better jokes that this particular patch of earth would instead become the global byword for vice, glamour, and manufactured dreams… and that the man most responsible for its transformation never wanted it to happen.

That man was Thomas Edison. And to understand how the inventor of the light bulb accidentally founded the movie capital of the world, we have to start with a running horse.

A racehorse, a shutter, and the birth of an industry

In 1872, photographer Eadweard Muybridge (yes, that’s the right spelling) was determined to help the governor of California, Leland Stanford, with an irritating problem. Stanford owned a racehorse and wanted it photographed in motion, but was frustrated that every picture taken of the horse failed to capture its speed clearly. The primitive cameras of that age could only translate a galloping horse’s legs into motion blur. Muybridge experimented with faster mechanical shutters for his camera, and eventually set up a row of 12 cameras next to the racetrack. The result was not just one clear image of a running horse, but a sequence of 12. 

Inspired by his results, Muybridge loaded the images into a device he called a zoopraxiscope (essentially a hand-cranked round projector) and with the turn of a handle, shattered the wall between still and moving images. 

Muybridge’s trick of stitching stillness into motion sent inventors everywhere scrambling to build devices that could do the same thing better.

Thomas Edison, characteristically, was among the first to get there. But here it’s worth pausing on who Edison actually was, because the popular image we have of the man – kindly genius, friend to mankind, the man who lit up the world – is really only half the story.

The other half

Thomas Alva Edison was a titan of invention, and that’s not an overstatement. The phonograph, the motion picture camera and the electric light bulb all came out of his laboratories and reshaped the industrialised world. He more or less invented the modern research lab itself, gathering teams of researchers under one roof in Menlo Park, New Jersey. By the end of his life he held 1,093 US patents. 

All that success was not won by being a pushover. Edison was shrewd, fiercely competitive and, by most accounts, not someone you wanted as an enemy.

Some of the texture of his character showed up early. At the age of 15, he saved a child from being struck by a runaway train. The child’s father was so grateful that he trained Edison as a telegraph operator. Edison began working as a telegrapher in a local general store before moving to Stratford Junction, Ontario, where he worked as a night telegrapher for the Grand Trunk Railway.

As a night telegrapher, he was supposed to be awake and alert. Instead, he would tire himself out by running chemistry experiments on the job and then sleeping through his shifts. After causing a near-collision of two trains, he decided it was time to put the telegraph behind him and set his sights on something bigger. The boy who cut corners on the night shift would grow into a man with a very particular attitude toward rules.

The camera and the prize behind it

Decades of invention and reinvention passed. By 1888, Edison had established himself as a household name and made a fortune in the process. While running an experimental mining operation, his mind turned to moving pictures. He set his employee William Kennedy Laurie Dickson (a miner who happened to be a gifted photographer) to work on a machine that would “do for the eye what the phonograph does for the ear”. 

Edison handled the electromechanical side, while Dickson did the hard optical and film work. By 1891 they had a working prototype (publicly demonstrated that May) and eventually a patent for the motion picture camera Edison called the Kinetograph. Edison’s name went on it, but most of the actual credit (historians agree) belonged to Dickson. This is a pattern that would repeat multiple times over the course of Edison’s life.

But the camera wasn’t even the prize Edison wanted. His real obsession was synchronised sound. He dreamed of a machine that would record picture and audio together and play them back in unison. Dickson shot the first sound film, starring himself, in the spring of 1890. But keeping picture and sound aligned proved maddeningly difficult, and Edison, ever the businessman, shelved the concept.

Instead he built the Kinetoscope, a peephole viewer that let one person at a time watch a short, silent film for a penny, and installed the machines in arcades.

By this point he had invented the camera and the “screen”, but what about the content? Well, naturally Edison had an answer for that too. In 1893, he built America’s first film studio in New Jersey – a cramped, tar-papered black box that the staff nicknamed “Black Maria”. Out of it came nearly 1,200 short films featuring acrobats, parades, a fire crew answering a call, a man sneezing (Fred Ott’s Sneeze, 1894), a couple kissing (The Kiss, 1896), and eventually the first-ever Frankenstein film in 1910. 

Edison had not just helped invent the movie camera. He had built the first factory for making movies. He was, for a brief moment, the entire American film industry.

And he intended to keep it that way.

The Trust and the men with the lead pipes

In 1908, Edison gathered the major patent holders in the budding film industry into a single conglomerate: the Motion Picture Patents Company, known to everyone as the Edison Trust. 

On paper it was nine studios pooling their patents. In practice it was a cartel with a chokehold on every essential piece of the filmmaking process, from cameras to raw film stock. If you wanted to make a movie in America, you went through Edison, or you got buried in lawsuits. Universal Studios alone fielded 289 separate legal complaints.

Where the courts weren’t enough, the Trust got creative. The MPPC was not above hiring mobsters to pay visits to filmmakers working outside its blessing, intimidating them and destroying their cameras. The courts of the eastern United States, meanwhile, seemed perfectly content to enforce the monopoly. Edison had become the king of the movies, and he ruled the way kings often do: with lawyers in the front and muscle in the back.

How to escape a king

If you were an independent filmmaker around 1910, working with equipment you technically had no right to use, New York was hostile territory. It sat right next to Edison’s headquarters and crawled with his agents, who had a habit of showing up to seize or destroy cameras mid-shoot.

Los Angeles, by contrast, had everything a fugitive industry could want. The weather allowed year-round filming. The landscape offered deserts, mountains, ocean, and ranchland within a day’s drive, so a studio could fake almost any setting on Earth. Land was cheap, labour was mostly non-union, and locals threw incentives at anyone willing to set up shop. As an added bonus, Californian courts seemed less enthusiastic about Edison’s filmmaking monopoly and less likely to blindly sway in his favour. 

The pioneers trickled in and then poured. William Selig opened a studio in Echo Park in 1909. In 1911, a New Jersey producer named David Horsley founded the first studio inside the little farming hamlet that the fig-farming Wilcoxes had named Hollywood. Others stampeded after him, clustering together into what they called a “movie colony”. A rural community of 5,000 souls in 1910 swelled to 35,000 by 1920. By 1915, three out of every five American films were being made in Hollywood. 

The king dethroned

The monopoly didn’t last either. In 1913, William Fox joined the owners of Paramount and Universal in bringing a complaint to the US government, arguing that the Edison Trust violated the Sherman Anti-Trust Act. The government agreed. In 1915 the court found that the MPPC was an illegal conspiracy in restraint of trade, and in 1917 the Supreme Court ordered it disbanded entirely. The cartel was broken, but by then the damage, from Edison’s point of view, was permanent. The filmmakers he had hounded out of New York had built something almost 5,000 kilometres away that no patent could touch.

That’s the story of how Thomas Edison – genius inventor, but also patent bully, monopolist, and employer of hired thugs – was probably the single biggest individual influence on the existence of Hollywood as we know it. Had he been a more generous man, a fairer competitor, or simply content to share the industry he helped create, there’s a good chance the film capital of the world would today be a stretch of West Orange, New Jersey, and Hollywood would be just another sleepy suburb of Los Angeles, perhaps still growing figs.

About the author: Dominique Olivier

Dominique Olivier uses her love of storytelling and ideation to help brands solve problems.

Her first book, Lessons from Loss, has been published by Penguin Random House.

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.

You can learn more about her work at dominiqueolivier.com and she can be reached on LinkedIn here.

Ghost Bites (Alexforbes | Master Drilling | MC Mining | Novus | Trematon)

The Finance Ghost
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Ghost Bites (Alexforbes | Master Drilling | MC Mining | Novus | Trematon)

In this edition of Ghost Bites:

  • Alexforbes posts single-digit growth
  • Good news from Master Drilling: there’s a dividend
  • MC Mining is raising debt from two shareholders
  • A small decline in earnings at Novus
  • Trematon has found a buyer for Generation Education

Alexforbes posts single-digit growth (JSE: AFH)

The underlying asset growth is far more exciting than profits

Alexforbes released results for the year ended March 2026. HEPS from continuing operations increased by just 2.8%, while the dividend was up by 4%. When the payout ratio has a bit of wiggle room, companies will try hard to avoid a disappointing dividend story.

HEPS as reported was down 5%, while normalised HEPS was flat. There are clearly a few complexities at play here.

Before we touch on the detailed results, it’s worth reminding you just how enormous this group is. The umbrella fund alone has assets under management of R197.7 billion. Total group assets increased by 22% to R733.2 billion!

The institutional business is by far the biggest slice of the assets, although retail assets under management increased by 21% to R112.3 billion. I get a kick from seeing that the retail segment generated a 32.7% increase in normalised profit before tax. The strength of retail investors should never be underestimated!

Despite these substantial growth rates in assets, operating income (defined as revenue less direct expenses) only grew by 10%. Operating expenses were up 9%, so they locked in a small margin uplift. An IFRS 16 adjustment was a major pressure point in expenses, so the underlying margin improvement is better than these numbers may suggest.

But between operating profit and HEPS, there are clearly a few things that moved against the group. One was normalised investment income, which fell from R229 million to R184 million. Another issue was an increase in the effective tax rate. Once those are taken into account, profit from continuing operations was up by 9%.

A sharp fall in profits from discontinued operations completely wiped out this growth, leading to perfectly flat normalised profit for the year. You need to be careful here though, as this relates to insurance businesses that are no longer in operation.

So, in this case, working with profit from continuing operations is probably the right approach. But of course, it’s even safer to work with the HEPS number, especially as this also adjusts for non-controlling interests and other factors. As mentioned, HEPS from continuing operations was up by just 2.8%, so Alexforbes is struggling to turn a strong increase in assets into meaningful growth for investors.

Ghost Bite: I like investing in simple businesses where it’s clear how revenue growth makes its way down the income statement. Alexforbes doesn’t fall into that category. With the share price down 17% in the past year, the market isn’t exactly rushing to buy this stock either.

Good news from Master Drilling: there’s a dividend (JSE: MDI)

But the underlying reason is the bigger highlight

When Master Drilling released their year ended December 2025 results back in March, they took the cautious approach of not declaring a dividend. The conflict in Iran was very fresh, so they weren’t sure how the oil price spike and other issues would play through the system.

At the time, they acknowledged that if things turned out better than expected, then a special dividend would be on the cards. The good news for shareholders is that a dividend of R0.40 per share has been declared.

It’s small in the context of the share price of R17.43, so it’s more of a delayed ordinary dividend than a special dividend in the traditional sense. Most special dividends are a function of excess cash on the balance sheet.

The underlying narrative is the most encouraging part of this update, as the decision to pay the dividend is based on all key initiatives progressing as scheduled.

Ghost Bite: The mining sector is clearly behaving as though the oil spike will pass. It always does, as the world doesn’t function very well at high oil prices. The sooner it drops back down, the better!

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General market sentiment

What is your overall feeling at the moment, outside of AI stocks?

MC Mining is raising debt from two shareholders (JSE: MCZ)

Welcome to the world of mezzanine finance

MC Mining has announced a $9.94 million debt capital raise in the form of unsecured convertible promissory notes. The investors are Kinetic Development Group (the controlling shareholder) and Eagle Canyon International (a minority shareholder).

Kinetic will subscribe for $6.14 million in notes and Eagle Canyon is signing up for $3.8 million.

The capital will of course be used for the Makhado hard coking coal project, which is the only asset that anyone really cares about at MC Mining.

The notes mature after just one year of being issued. They may be converted into shares at $0.2089 per share. At current exchange rates, that’s around R3.40 per share vs. the current spot price of R3.28.

Shareholders will need to approve this transaction, with a circular to be sent out in due course. The conversion price seems pretty fair to me under the circumstances, with holders of 25% of MC Mining’s voting shares already acknowledging that they will vote in favour of the raise.

Ghost Bite: As I’ve written many times, the only guarantee in the world of junior mining is that your stake will be diluted over time. There are many different ways that this happens in practice, but it’s the inevitable outcome of a company needing to raise capital in creative ways to get a project across the line.

A small decline in earnings at Novus (JSE: NVS)

Detailed results should be available before the weekend

Novus has released a trading statement for the year ended March 2026. It doesn’t give us any operational detail unfortunately, but it does confirm that HEPS will be down by between 0% and 8% for the period.

One of the contributing factors is the impairment of a related party loan of R19.9 million. We will have to wait for detailed results to know for sure what has happened at the company.

Separately, Mustek (JSE: MST) confirmed via SENS that Novus now has 50.39% in the company. This is outright control.

In case you’re wondering, it’s possible to control a company with a smaller stake, as no shareholder meeting ever has 100% attendance. But once you tip the scale over 50%, there’s no debate around it anymore: you control the company.

The only thing you aren’t guaranteed to get across the line is a special resolution, which needs 75% approval. This is where you’ll often see the impact of concert parties and voting arrangements that include the controlling shareholder. The true voting power of a controlling shareholder can be much higher than the direct stake suggests.

Ghost Bite: It’s been a regulatory process of note to get to this point. Novus will now need to show growth to its investors, as the share price is down 26% over 12 months.

Trematon has found a buyer for Generation Education (JSE: TMT)

As expected, it’s an impact fund

Trematon has previously told the market that they are looking to sell the Generation Education business. Full details are now available, with a category 1 circular on the way.

The price on the table is R172 million and the buyer is the Education Investment Impact Fund of South Africa, which is managed by Old Mutual Alternative Investments.

The buyer has more than just a profit motive, as the mandate includes a desire to improve the quality of education in South Africa. This is practically a prerequisite for school assets these days, as the low birth rate has stripped growth out of the sector.

In the announcement, Trematon acknowledges that Generation has not lived up to growth expectations. This despite the school group being focused on the Western Cape, where there has been a population explosion. The model may simply be too niche to reach the scale required to generate economic returns.

To be clear, this doesn’t mean that the schools aren’t profitable. It simply means that they can’t grow quickly enough to justify a purely for-profit motive. We saw a similar thing play out at Curro.

Ghost Bite: Generation Group made profit after tax of just R3 million for the six months to February. This selling price is based mainly on the replacement cost of the schools and the existing footprint, rather than the profit it can actually generate. I’ll be very surprised if the independent expert doesn’t opine that the deal is fair and reasonable to shareholders. We will have to wait for the circular in August to know for sure.

Results of previous poll:

Nibbles:

  • Director dealings:
    • The obliteration of The Foschini Group (JSE: TFG) share price has finally reached a point where we are seeing massive purchases by directors. That’s a good thing. An associate of Michael Lewis bought shares worth nearly R30 million. The spouse of a non-executive director bought shares worth almost R900k. That’s bullish, but it would still be good to see more executive directors buying shares as a show of faith.
    • The CEO of Mr Price (JSE: MRP) received share awards and sold 82% of them for R24 million. This is significantly more than he needed to sell just to cover the tax, so that’s a sale in my books. Not a great look when the share price is still way off the pre-NKD levels.
    • The CEO of Oceana (JSE: OCE) bought shares worth R1.25 million and the CFO joined in with a purchase worth R375k.
    • The company secretary of Santam (JSE: SNT) sold shares worth R685k.
    • A director of Sebata Holdings (JSE: SEB) bought shares worth R5k.
    • As a fun reminder of what real money looks like, the Wiese family entered into a scrip borrowing arrangement over Shoprite (JSE: SHP) shares worth almost R2 billion. This doesn’t tell you anything about the Shoprite share price – I just include it for entertainment value to make us all feel poor.
  • Sirius Real Estate (JSE: SRE) has placed €185.1 million worth of notes through tap issues in two existing corporate bonds. Essentially, this means that they’ve just increased the size of these bond programmes by issuing more notes (under the same terms and conditions and at current traded prices). They’ve done this to refinance existing debt and for “general corporate purposes” – which would mean either acquisitions or capex projects in the portfolio.
  • There’s a change to top management at Bell Equipment (JSE: BEL). Ashley Bell is resigning as CEO, as he wishes to return to his own business interests. His resignation is effective from 31 August 2026, although he remains available to assist in a transition period. Ashley will also be appointed as a non-executive director, which makes sense given the family interests here. Izak Jacobus Marthinus van Niekerk has been named as his replacement, having previously worked for Bell from 2003 to 2016.
  • Pan African Resources (JSE: PAN) is making progress on the acquisition of Emmerson Resources. Emmerson shareholders still need to vote on the deal, with the meeting scheduled for 15th June. But in the meantime, the Australian Stock Exchange (ASX) has confirmed that Pan African will be admitted to the official list subject to certain conditions. In other words, if Emmerson shareholders give it the green light, Pan African will be able to execute the planned additional listing on the ASX. This won’t affect the JSE and LSE listings.
  • enX Group (JSE: ENX) has received approval from the SARB for the special dividend of R1.92 per share. The payment date is 29 June, based on a last day to trade of 23 June. The current share price is R4.40, so they are paying out over 40% of the value of the company!
  • Copper 360 (JSE: CPR) shareholders just can’t catch a break. In yet another setback to rebuilding investor confidence, CFO Ferdinand Nel has resigned with immediate effect. This means that no successor has been named as yet, not even on an interim basis.
  • At long last, the suspension of trade in Wesizwe Platinum’s (JSE: WEZ) shares has been lifted. The share price promptly increased by 80%!
  • Visual International (JSE: VIS) has received an extension from the JSE for the posting of the RAL Trust circular. The new date is 17 June 2026.
  • If you are a shareholder or warrantholder in Marshall Monteagle (JSE: MMP), then be aware that the company wants to make some changes to the terms and conditions of the warrants. There’s a shareholder meeting scheduled for 25th June.

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

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

Listed Companies

Education Investment Impact Fund of South Africa has entered into an agreement with Trematon Capital Investments to acquire the enterprise known as the Generation Education Group for an aggregate cash consideration of R172 million. The components of the Generation Group, in which Trematon has an 87% interest, include the businesses of PropGen, Si Institute and Generation Education. The transaction represents a category 1 disposal and as such shareholder approval is required.

Old Mutual’s private equity arm (OMPE) alongside Carlye, has exited its 2014 investment in TiAuto Investments, operating through Tiger Wheel & Tyre and Tyres & More stores to Japanese conglomerate Marubeni Corporation. The business which generates annual combined group and franchisee sales of c.R4,5 billion is a pan-African operation with more than 160 retail outlets across five African countries – South Africa, Botswana, Zambia, Zimbabwe and Namibia. The deal is said to be worth R2,6 billion.

Afrimat has disposed of the Divestiture Businesses to Saturc for R215 million. A cash amount of R160 million is payable on close with the balance of R55 million deferred and payable over three years subject to the fulfilment of certain financial and operational conditions. The disposal is in terms of the Tribunal approval given to Afrimat on the acquisition in April 2024 of Lafarge South Africa.

Unlisted Companies

South African end-to-end rail services company Traxtion has concluded an US$86 million equity capital raise from Standard Bank, Stanlib Infrastructure Investments and Harith via the Harith InfraCo and PAIDF2 funds. The capital will be used to fund the rolling stock investment programme, and to strengthen its future funding position.

H1, a local investment holding and asset management vehicle, and Revego Fund Managers, a black-owned fund manager, are in discussions to create a renewable energy equity investment platform with a combined asset base of c.R13,3 billion. The proposed transaction brings together H1’s interest in a large, diversified portfolio of predominantly operating renewable energy assets with Revego’s institutional investment platform, the Revego Africa Energy Fund. The portfolio managed by H1 spans 26 projects across wind, solar, battery storage and hydro. The merged platform will positioned to play an active role in the anticipated wave of industry consolidation from 2028 onwards.

The Sasfin Share Incentive Trust has made a firm cash offer of R42.00 per share to acquire the remaining minority shares in Sasfin Holdings by way of a Scheme of Arrangement. Sasfin Holdings delisted from the JSE in December 2024 with a number of minority shareholders remaining invested in the unlisted entity.

The Development Bank of Southern Africa (DBSA) has announced an undisclosed investment into Zimi, an end-to-end solution provider for electric vehicles – charging, power, finance – powered by a seamless digital management platform. The partnership represents growing institutional support for local electric mobility and sustainable transport infrastructure.

Kloset Klub, a circular fashion platform, has received an undisclosed second investment from Thinkroom’s early-stage portfolio. Kloset Klub enables users to buy and sell pre-owned fashion through a curated resale model, peer-to-peer transactions and managed wardrobe services.

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

Weekly corporate finance activity by SA exchange-listed companies

Marylou Greig
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Weekly corporate finance activity by SA exchange-listed companies

Novus has acquired an additional 6,001,060 Mustek shares at R15.00 per share on the open market (outside of the Mandatory Offer) for R90 million. The company now holds 28,96 million Mustek shares constituting 50.39% of the issued shares in Mustek. Together with concert parties this shareholding increases to c.70.68%.

Oasis Crescent Property Fund has issued 827,719 new units to shareholders opting to reinvest their distribution in respect of the six months ended 31 March 2026. The shares were issued at a price of R28.78 for an aggregate R24,49 million.

Following the results of the scrip dividend election, Spear REIT will issue 8,276,950 new ordinary shares in the company in lieu of an interim dividend, resulting in a capitalisation of the distributable retained profits in the company of R107.64 million. The shares were based on a reinvestment price of R13.00 per share.

OUTsurance (OGL) has issued 507,726 new shares in exchange for 1,162,705 ordinary shares in OUTsurance Holdings (OHL) for an aggregate R35,88 million. As a result of the transaction, OGL’s shareholding in OHL has increased to 92.86% with the remaining 7.14% held by directors and management.

Master Drilling has declared a special dividend of 40 cents per ordinary share from income reserves, valued at R60,2 million. The dividend will be paid to shareholders on 17 August 2026.

Omina is to pay a special dividend of 280 cents per share, payable in cash in respect of the year ended 31 Mach 2026.

Following the acquisition of Emmerson Resources by Pan African Resources and the request to trade its shares on the ASX, the company has received an ASX conditional admission letter with trading to commence on a normal settlement basis on 2 July 2026. The company’s shares will continue to trade, as a dual primary issuer, on the LSE and JSE following the proposed ASX listing.

On June 11, 2026, the JSE lifted the suspension of trade in Wesizwe Platinum shares on the bourse. The shares were first suspended in June 2025. This was due to the company’s failure to publish its audited annual financial statements for the year ended 31 December 2024 within the period prescribed by the JSE Listing Requirements.

This week the following companies announced the repurchase of shares:

Netcare repurchased 41,451,340 of its ordinary shares in terms of the general authority granted by shareholders. The total value of the shares repurchased was R696,3 million with the average price paid per ordinary share of R16.80. Since commencement of the repurchase programme in September 2023, Netcare has repurchased 193,2 million shares, representing 13.4% of the total shares in issue as at 30 September 2023, at an average of R13.61 per share.

In its annual report, The Foschini Group reported that it had bought back a total of 10 million shares at a weighted average share price per share of R105.89 for a gross consideration of R1,03 billion.

Ninety One plc announced an increase in the repurchase programme from £30 million to £55 million to be completed by 21 July 2026. The shares to be purchased on the open market will be cancelled to reduce the Company’s ordinary share capital. This week the company repurchased a further 163,561 ordinary shares at an average price 217 pence for an aggregate £350,082.

GreenCoat Renewables has implemented a share buyback programme totalling €100 million over 12 months with a first tranche amounting to €25 million beginning on 5 March 2026 – representing 13% of the issued share capital. This week 1,079,250 shares were repurchased for and aggregate €827,307.

Anheuser-Busch InBev’s US$6 billion share buy-back programme continues. The shares acquired will be kept as treasury shares to fulfil future share delivery commitments under the group’s stock ownership plans. During the period 1 to 5 2026, the group repurchased 537,216 shares for €36,97 million.

During the period 1 – 5 June 2026, Prosus repurchased a further 2,631,597 Prosus shares for an aggregate €107,22 million and Naspers, a further 905,808 Naspers shares for a total consideration of R805,88 million.

Two companies issued a profit warning this week: Brikor and Novus.

One company issued or withdrew a cautionary notice: Trematon Capital Investments.

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

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

Kasapreko Plc’s IPO attracted total bids of GHS1,72 billion, more than double the targeted raise of GHS700 million, representing an oversubscription of roughly 146%. The IPO consisted of 583,333,333 ordinary shares at GHS1.20 per share. The shares are expected to begin trading next week.

Nigeria’s Agriarche, has received backing from French development finance institution Proparco. Financial terms were not disclosed. Agriarche – a female led agri-tech company, has developed an integrated agricultural model spanning multiple segments of the value chain, including commodity aggregation, logistics, payments for local and export markets through its flagship platform, Kasuwa.

Edafa Venture announced the acquisition of two AI startups operating in construction and healthcare sectors. Kuadra leverages AI to transform the planning, management and execution of large-scale construction projects through interconnected smart operating systems that enhance efficiency and streamline project operations. IRRI Vision is an Egyptian health-tech company that develops AI-powered solutions to support physicians and healthcare providers with faster and more accurate diagnostic tools, helping improve treatment outcomes and overall quality of healthcare services. Financial terms were not disclosed.

Blnk, an Eqyptian fintech company has raised US$12,5 million in equity funding and $24,6 million in local debt facilities. The Series A equity funding round was led by Algebra Ventures, with participation from SANAD Fund for MSME, Endeavor Catalyst and Emirates International Investment Company (EIIC). Debt funding was secured from a number of leading local banks, with notable participation from Suez Canal Bank, Bank Albaraka and National Bank of Egypt, as well as Non-Bank Financial institutions (NBFIs) including Corplease, Globalcorp and BM Lease, among others.

CreditChek raised US$600k in seed funding led by Janngo Capital to expand its credit data infrastructure and services across the East African market. Additional investors include Vastly Valuable Ventures, Unipeg Capital, and returning investor Assembly Investors. CreditChek, based in Nigeria, is a credit assessment provider. The company provides a credit data infrastructure platform that aggregates and standardizes borrower data for financial institutions.

Kenya’s Family Bank has secured the Capital Markets Authority’s approval to list on the Nairobi Securities Exchange on June 23. This comes after Family Bank raised KES 8 billion (US$61,8 million) in a 2025 private placement, exceeding its KES 6.09 billion ($47,1 million) target.

MNT-Halan, an Egyptian fintech ecosystem, has reached a valuation of US$1,4 billion following the first closing of a new investment round led by Al Ahly Capital, the investment arm of the National Bank of Egypt. A second closing is expected as part of the ongoing round.

IQSTEL Inc., a global Connectivity, AI, and Digital Services company, has announced a Binding Memorandum of Understanding to acquire a 51% controlling interest in Ultranet Telecom Group, a fast-growing telecom and technology company headquartered in Ghana with operations across Africa and international markets. The parties are working toward a Definitive Purchase Agreement within 60 days, with a target close in Q3 2026. Financial terms are not being disclosed at this time.

Wilmar International announced that it has entered into definitive agreements with Tropical General Investments Group to combine their respective Nigerian and Republic of Benin operating businesses, into a single integrated platform through a new 50:50 joint venture. Following the signing of the definitive agreements, Wilmar and TGI Group will contribute a portfolio of complementary operating businesses and brands in Nigeria and Benin to the joint venture, spanning upstream agriculture, oil palm plantations, edible oils, edible nuts, rice, culinary, food manufacturing and nationwide distribution amongst others.

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

Can you take the mailing list?

Priyanka Raath
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Can you take the mailing list?

Direct marketing consent in South African corporate restructures

When a corporate restructure or acquisition closes, the acquiring entity typically inherits various commercial assets: customer contracts, supplier relationships, intellectual property and – increasingly – marketing databases. These databases are built over years and represent significant commercial value. Yet a question that is often missed in the transaction is whether the customer’s consent to receive direct marketing travels with the database to the new legal entity?

This question, which remains untested in South African courts, deserves closer attention from M&A practitioners, particularly as the Information Regulator continues to mature in its enforcement posture.

The legislative framework

Section 69 of the Protection of Personal Information Act, 2013 (POPIA) governs direct marketing by means of unsolicited electronic communications: a responsible party may only engage in direct marketing by electronic means if the data subject has given consent (i.e. opt-in consent). There is a limited exception for existing customers, but even that exception is tethered to the responsible party that originally collected the personal information in the context of a sale.

The POPIA Regulations elaborate on the mechanisms through which consent must be obtained and recorded. Notably, Form 4 of the Regulations require that opt-in consent wording identify the responsible party by name, linking the data subject’s consent to a specific legal entity. Neither POPIA nor the Regulations address the question of whether consent given to one responsible party may be relied upon by a successor entity following a corporate restructure.

The nature of the transaction matters

The answer to the transferability question is not uniform. It depends on the nature of the transaction.

In a share sale, the legal entity that holds the marketing database does not change. The target company remains the responsible party, and customers’ consent – given to that entity – is undisturbed. The change in ultimate ownership at the shareholder level does not, without more, alter the identity of the entity with which the customer has a direct marketing relationship. Share sales, therefore, present the lowest risk from a consent-transfer perspective, provided the target company continues to trade under its existing name and identity.

The position is materially different in a business transfer or asset sale. Here, the marketing database is transferred from the selling entity to the acquiring entity, i.e. a distinct legal person. The customer consented to receive marketing from Entity A; it is now Entity B that wishes to send the communication. Even if the business operations are materially identical (same brand, same products, same customer experience), the legal identity of the responsible party has changed. It is, at least, arguable on a strict interpretation of the regulations that consent given to Entity A does not automatically extend to Entity B.

The conservative approach

The most legally defensible approach is to treat existing consents as non-transferable and to conduct a fresh opt-in campaign before the acquiring entity engages in any direct marketing. This eliminates regulatory risk and ensures full compliance with the letter of section 69.

The practical difficulty is obvious. Re-consent campaigns are expensive, operationally burdensome and, critically, tend to yield low response rates. A marketing database of considerable commercial value can be reduced to a fraction of its size overnight. For many acquirers, particularly those who have priced the transaction on the assumption that the database is a usable asset, this outcome is commercially unpalatable.

A risk-based alternative

A more pragmatic approach, which carries a degree of regulatory risk but may be defensible in the right circumstances, involves a risk-based assessment coupled with enhanced transparency measures.

This approach may be supportable where the original consent wording is sufficiently broad to encompass successors or affiliated entities; where the nature of the business relationship remains unchanged from the customer’s perspective; where customers are clearly and proactively informed of the restructure and the change in the legal entity responsible for their data; where customers are given a prominent and accessible opportunity to opt out of marketing from the new entity at the point of notification; and where opt-out preferences are diligently honoured.

Acquirers adopting this approach should ensure that all post-restructure communications clearly identify the new entity as the responsible party, and should document their rationale in a personal information impact assessment. Monitoring for complaints and regulatory action is essential, and marketing to any data subject who objects must cease immediately.

Practical recommendations for dealmakers

M&A practitioners would be well served to address this issue early in the transaction lifecycle. During due diligence, the scope and wording of existing marketing consents should be reviewed with care. The commercial value of the marketing database should be assessed against the cost of a re-consent campaign, and consideration should be given to whether a phased approach offers a workable middle path (for instance, prioritising re-consent for high-value customer segments).

The transaction structure itself may also be relevant. Where the marketing database is a material asset, a share sale may present fewer complications than a business transfer, and this factor ought to feature in structuring discussions.

Until the South African courts or the Information Regulator provide definitive guidance, the transferability of direct marketing consent will remain a question of risk appetite rather than legal certainty. The prudent dealmaker will plan accordingly.

Priyanka Raath is an Executive in 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

Africa’s fintech consolidation wave continues amid challenges

Konrad Fleischhauer and Kayla Jackson
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Africa’s fintech consolidation wave continues amid challenges

After years of fragmented growth, Africa’s fintech sector has entered an era of increased consolidation, with the continent’s tech ecosystem having recorded 67 reported M&A transactions in 2025, a 72% surge from 2024, and comfortably surpassing the previous record of 40 deals set in 20221. Fintech led the charge, accounting for 31 of those deals — roughly 46% of the total — as cash-rich platforms moved decisively to acquire market share, banking licences and infrastructure, rather than waiting on organic growth.

The shift is structural, not cyclical. The “growth at all costs” model that defined African tech’s venture-fuelled boom has given way to a harder-nosed calculus: profitability, regulatory moats, and scale. With African startups raising US$3,42 billion in 2025 — a healthy rebound from $2,24 billion in 2024, but concentrated in fewer hands — well-capitalised incumbents are well positioned. Increased partnerships and expansions also complemented M&A, as firms like Nigeria’s Rank (ex-Moni) snapped up AjoMoney and Zazzau Microfinance Bank for savings and credit services, and South African payments specialist, Stitch Group2 similarly acquired ExiPay and Efficacy Payments to bolster its infrastructure.

THE DEALS DRIVING THE NARRATIVE

Two transactions encapsulate the moment. In Nigeria, Moniepoint completed its acquisition of a 78% stake in Kenya’s Sumac Microfinance Bank. Sumac, a licensed deposit-taking lender, gives Moniepoint instant access to Kenya’s $67,3 billion mobile payments market, bypassing a lengthy regulatory process. After an earlier attempt to acquire payments firm KopoKopo fell apart, Moniepoint pivoted to Sumac and secured this East African foothold (retaining Sumac’s infrastructure and staff)34, while also grabbing UK’s Bancom Europe for broader capabilities.5

In South Africa, Lesaka Technologies sealed a transformative $61 million (R1,1 billion) deal for Bank Zero in 2025.6 Bank Zero brought more than R400 million ($22 million) in deposits and over 40,000 funded accounts to the transaction, embedding a zero-fee neobank into Lesaka’s platform for consumers, merchants and enterprises. Chairman Michael Jordaan, the former FNB CEO who co-founded Bank Zero, joined Lesaka’s board post-deal, signalling governance depth.7

Both deals follow the same playbook: acquire a licence, retain the team, accelerate the model.

VC-TO-PE SHIFT FUELS EXIT STRATEGIES

The M&A wave is inseparable from a broader shift in how capital flows in and out of African tech. With global IPO markets subdued, the traditional venture-to-public-markets exit path has narrowed, and Private equity (PE) is filling the gap. The African Private Equity and Venture Capital Association (AVCA) noted 63 exits in 2024 – up 50% year-on-year – with secondary transactions now accounting for a third of all exits. PE suits the new African tech reality: predictable recurring revenues in payments application programming interfaces, software as a service infrastructure, and lending platforms translate more cleanly into PE return models than into volatile public market multiples.

GEOGRAPHY, REGULATION, AND THE ROAD AHEAD

Three-quarters of Africa’s 2025 tech M&A activity was concentrated in Africa’s “Big Four” markets — South Africa (16 deals), Kenya (14), Egypt (11) and Nigeria (9) — the same markets that attracted the lion’s share of 2025 funding: $933 million, $811 million, $548 million, and $438 million respectively. The correlation is not coincidental. More mature ecosystems attract capital, which breeds acquirers, which deepens ecosystems further. The flywheel is turning.

The regulatory dimension is equally important. Across the continent, buying a licensed institution compresses years of compliance into a single transaction, as illustrated by Moniepoint’s Sumac play. In markets where regulatory frameworks are tightening, licence acquisition will continue to gain strategic importance.

Looking to the remainder of 2026, it is likely that the above trends will continue, although the current global economic uncertainty may have an impact – not least on the continued appetite of Gulf sovereign wealth funds for African fintech assets – while regulatory delays, valuation gaps between founders and buyers, and currency volatility will remain challenges. That said, the direction of travel is clear, with consolidation in Africa’s fintech sector set to continue.

Konrad Fleischhauer and Kayla Jackson 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

  1. https://www.ecofinagency.com/news/3001-52458-african-startup-m-a-hits-record-67-deals-in-2025-led-by-fintech ↩︎
  2. Efficacy Payments has been acquired by Stitch Group, enabling the Group to offer card acquiring services ↩︎
  3. https://dabafinance.com/en/news/kenya-clears-nigeria-fintech-moniepoint-to-acquire-sumac-microfinance ↩︎
  4. https://techcabal.com/2025/06/02/moniepoint-kenya-sumac-78-kopokopo/ ↩︎
  5. https://www.ecofinagency.com/news/3001-52458-african-startup-m-a-hits-record-67-deals-in-2025-led-by-fintech ↩︎
  6. https://www.finasa.org.za/post/south-african-fintech-ecosystem-30-day-summary-feb-march-2026-funding-regulation-key-deals ↩︎
  7. https://www.marketscreener.com/quote/stock/LESAKA-TECHNOLOGIES-INC-10275/news/South-African-fintech-group-Lesaka-acquires-Bank-Zero-for-61mn-50411637/ ↩︎

Ghost Stories #105: Altron – a multi-platform, multi-decade moat

The Finance Ghost
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Ghost Stories #105: Altron – a multi-platform, multi-decade moat

The Finance Ghost welcomes Altron CEO Werner Kapp fresh off a standout capital markets day that left a strong impression: this is a business whose growth story isn’t tightly tethered to South Africa’s traditional economic constraints. From FinTech and HealthTech to telematics and IT security, Altron operates a portfolio of platform businesses that quietly underpin everyday life, even if most consumers don’t realise it!

In this conversation, Werner unpacks how these platforms drive resilient, annuity-style revenues, while also leaning into powerful structural tailwinds like digitisation, mobile adoption and the evolution of the payments ecosystem.

The discussion goes deeper into the mechanics of the Altron model. From competitive moats built over decades, to the strategic role of data, AI and capital allocation across a diversified platform base, there’s much to discuss. Werner also explains the thinking behind the group’s AI factory, its disciplined approach to growth vs margins, and why regulatory change in FinTech could unlock meaningful upside.

This is a rare, detailed look inside a South African tech business that touches millions of lives every day.

Topics in this podcast:

  • Why Altron’s platform businesses can grow independently of SA GDP constraints
  • The difference between platform vs IT services exposure to economic cycles
  • Real-world examples of how Altron products are used daily (IDs, payments, healthcare, vehicle tracking)
  • South Africa’s digital adoption curve and key structural tailwinds
  • The impact of payments modernisation (PayShap, SARB reforms) on FinTech
  • Building and defending a moat through data, distribution and embedded systems
  • How Altron uses cross-platform data insights to enhance value
  • The role and strategy behind the AI factory (and why it’s not a GPU business)
  • Managing capital allocation across multiple platforms with a strong annuity base
  • Growth vs margin trade-offs in a competitive tech landscape
  • Netstar dynamics: OEM channels, Chinese vehicle growth and market shifts
  • Fintech upside from potential direct access to payment rails
  • Why Altron’s 91% annuity revenue model is central to its investment case

Listen to the podcast here:

This podcast has been sponsored by Altron. As always, I was allowed to ask whatever I felt is relevant to investors. Please do your own research and treat this as only one part of your research process. Please always speak to a financial advisor before making any investments.

Transcript:

The Finance Ghost: Welcome to this episode of the Ghost Stories podcast. I must apologise for my voice. I have a cold. So doing my best here.

Someone else who’s certainly been doing their best and doesn’t appear to have a cold is the team at Altron. They are fresh off a very impressive, highly insightful capital markets day. I must say I really, really enjoyed it.

To talk to us here today, we have Werner Kapp. He is the CEO of Altron. He’s going to take us through some of the themes in the group strategy, some of the stuff that came through from the capital markets day, which I must say, I thoroughly enjoyed listening to. I attended online.

I always applaud companies who take the step of a capital markets day and actually make it publicly available. So well done. It’s always so good for the broader investor community to just get a sense of what’s going on.

The key message that I took out from it was that Altron’s growth is not constrained by many of the factors that we are so accustomed to in South Africa. GDP growth, infrastructure investment, all that kind of stuff doesn’t seem to be much of a constraint in your world.

And that’s because the digital world is just so different. It’s got exciting adoption curves; it’s got lots of opportunities linked to data. Very excited to hear more about these things on this podcast. So welcome, Werner. Thank you so much.

And would you say that my key takeout from the day is an accurate view on things?

Werner Kapp: Firstly, thank you very much for having me. I’m a big fan of your show, so it’s really nice to be on it. Glad that you enjoyed the capital markets day. I think it’s a fantastically accurate description.

I think probably the only thing to zone in on would be that I think it’s particularly our platform businesses that are not necessarily constrained by the structural economy.

I think our IT services businesses (so those are the businesses that provide IT services to large public and private sector enterprises) – they are impacted by consumer confidence, business confidence, fixed capital investment. So all the normal structural GDP.

But because of the role that our platform businesses play specifically in digitisation across the economy, but particularly the informal segment, yes, I think it is an accurate description.

That’s obviously why we are delighted to have been able to produce the kind of results that we have and why we are really, really excited about the business going forward.

It’s a great opportunity, not just for us, but for the country as well. And I think digitisation has the opportunity to close that digital divide over time.

The Finance Ghost: Yeah, absolutely. No company is an island, but you do have a very large boat. So it does seem to be quite an encouraging story right now.

So, I think let’s dig into more elements then of what we saw yesterday and just where the business is at the moment.

Something quite interesting – obviously I look at everything across the market, and the JSE remains a market where I think the more traditional sectors like mining and retail, they get a lot of attention.

We just don’t have that tech culture that you’ll see on the NASDAQ and those sort of places. And yet we use technology every single day in just about every single thing that we do.

One of the more powerful messages that you delivered during that capital markets day was the extent to which Altron’s services are so ingrained in our daily lives. I found that very interesting. It’s these platform businesses that you speak of, right? We actually see and touch them all the time. We just don’t realise it.

So perhaps you could give the listeners just an overview of the Altron group. Very high level – people can obviously go read that for themselves. And then perhaps more importantly, those real-world examples of how we actually use your products every day in South Africa.

Werner Kapp: That’s probably one of the things I like the most about Altron and one of the things that really excited me most about the opportunity when I first joined the group.

At corporate level, at a high level we’ve got what we call platform and IT services businesses. Our platform business is Netstar, a well-known consumer brand in stolen vehicle recovery, and in telematics.  

Then we’ve got our FinTech business and our HealthTech business, and our IT services businesses are Altron Document Solutions, which is a managed print business. It’s the Xerox partner for South Africa and a couple of other African countries.

Altron Digital Business, which is a systems integration business, and Altron Security. And then we have a joint venture with a global company called Altron Arrow, which is an electronic sub-component business. That’s the corporate side of it.

I think the cool side of it, that a lot of South Africans probably don’t know about engaging with Altron on a daily basis and how we enable things – I’ll give you four practical examples.

The most practical one is your smart ID card that you carry around with you. There are about 27 million smart ID cards in South Africa in issue, printed by us, and your biometric data is securely encrypted on that card by Altron. So that’s the first one.

If you go to a private practitioner, if you or your family go to a doctor, there’s about a 45% chance that your physician would run our private practice management system. So that appointment is facilitated. About 60% of the healthcare transactions in South Africa gets done on our switch.

So, 60% chance that if you’re on private health care, that the facilitation of that payment, of your appointment by the medical aid or getting your medicine for that cough of yours later today at the local pharmacy: that payment would be facilitated by our switch.

We’ve got about a million people whose safety – both from a vehicle perspective, assets and family – if you’re a Netstar subscriber, we’re tracking what you’re doing – we track about 170 million km on a daily basis of vehicles and assets across the country.

My kids, by the way, they’re writing exams right now. I guess like most kids in the country. It’s a really good chance that the exam papers – we printed about 500 million exam pages last year.

And then probably the last one is – and you can keep an eye out for it, by the way, next time you’re at your local coffee shop, drive through, a number of clothing retailers – that payment system is facilitated by Altron. If you look at your payment device, you may see an Altron logo on it.

I went Christmas shopping a while back in a well-known shopping centre in Joburg. Three or four of the places where we bought Christmas gifts, the payment was done on an Altron card machine.

The Finance Ghost: It is a really, really big business and it touches so many elements of our daily life, which I really enjoy.

And something else that came through in that capital markets day, which then explains just why this is all possible, is that the South African population is actually quite digitally savvy.

And I agree with that. You’re obviously seeing it every day, but I mean, even just my own perception, it does make sense. And that is such a key ingredient for what you are doing. Things like the shift towards a cashless economy, those sorts of trends. Digital IDs as you say, just take us through some of these growth tailwinds in our country, what you mean by comments like South Africans are digitally savvy, and then obviously how the broader Altron Group is actually positioned to maximise the opportunities that flow from this.

Werner Kapp: I think we’re one of the countries with the highest mobile penetration rate. Across the board, you see people, whether they’re standing outside taxi ranks, whether it’s us in corporates in queues, people are forever on their mobile phones, very digitally savvy.

People are listening to podcasts like yourselves on their phones, consuming apps all the time, etc. So, I think just that and the fact that we have a very good connectivity infrastructure in South Africa.

There are world-class data centres, there’s a very good connectivity infrastructure. We’ve got a significant amount of capacity coming from subsea cables across both the east and the western coast of the African continent.

So, I think when you combine those two (which by the way is something you see in emerging markets across the world, but I think it’s particularly prevalent in South Africa), you get this adoption. People are very, very happy to use digital solutions rather than physical solutions.

And what’s happening in South Africa is a couple of things and you’ve touched on it.

One is the Payments Ecosystem Modernisation project, which the South African Reserve Bank launched a while back. I mean you would have seen PayInc and the PayShap rails that were really introduced.

And what that does is really open up some of the payment activities in South Africa, really to stimulate particularly sort of fintechs in that informal economy. Some of the costs can be quite prohibitive for both the consumers of that service and the merchants.

So, we certainly see that as a great opportunity because obviously if you add the deregulation, we certainly intend to apply for some of those payment activities. It’s being gazetted right now. So, we believe that we’ll have the opportunity to do that by the end of this year.

You’ve touched on it, been in the news quite a lot recently: we’ve seen the Minister of Home Affairs talk about a digital national identity. Sunday evening, we saw President Ramaphosa, for example, speak about some of the challenges with illegal immigrant workers in South Africa and the fact that they want to bring the old green ID book and passport to an end. There’s an opportunity for us.

MyMzansi is another example where I think the South African government has also realised that they can improve services to us as citizens through the use of digitisation, which really goes beyond some of the physical constraints and some of the public service constraints that we have in the country.

Certainly they are spaces that we play in. And also, public and private healthcare. Although our HealthTech business primarily plays in private practice. But we do think because of the data records that we have – we’ve got data records of about 15 million people in South Africa – we also think should there be NHI (and NHI will be absolutely dependent, by the way, on electronic data records), we think we’re well positioned for that opportunity as well.

The Finance Ghost: Absolutely. So, you’ve alluded to something there that I wanted to touch on, which is just the extent of the moat in your business, in the world that we now find ourselves in. So, for example, one of the things I picked up yesterday was that the group is roughly 90% annuity revenue. I think it was a little bit higher than that.

You’ve got a bunch of moats. I think that came through really well as well. For example, when the MD of the HealthTech side talked about – just “time in the saddle” was one of the messages that I got. You’ve been out there for decades doing this. That takes time.

Anyone who’s built a business knows you don’t just wake up and displace something that’s already there. I mean, this is year six for me of The Finance Ghost and it’s been an incredible journey that has a very long way to go.

It’s very, very easy to sit with a spreadsheet and talk about this and that. Go build a business and you’ll see how hard it is to actually get that market penetration and hang on to it.

And this is a big part of the bull case, right? You’ve done this in a lot of your businesses. You’ve got the data, as you’ve talked about.

I guess the one thing that an investor might ask, and it did come up in the questions from analysts and at your CMD – stuff like just why this particular group of platforms actually belong together in one place, in one Altron?

For example, does the data from one platform make another platform better? Shared services, synergies?

Maybe just explain to us why Altron looks the way it does. Because as you said at the capital markets day, there isn’t actually another group that someone can directly compare you to.

Werner Kapp: Yeah, it’s a very, very good question. I mean, if I could maybe touch on the moat maybe for two minutes.

You’re 100% right. Our platform businesses are a 30-year overnight success. Right? [Laughs].

And I think a moat is a combination of the software – we’re talking about people consuming services on mobile applications. That experience comes across as very simplistic and very seamless for the consumer. But behind that ecosystem is an incredibly complex embedded ecosystem with high volumes.

When you go to the pharmacy later today to get your cough medicine, you’re presenting your medical aid card and that’s a very seamless, easy process for you, right? Which I think hardly goes wrong.

But the ecosystem that the software has to traverse in the background is really, really complex and it takes years of experience and the software and embeddedness, I think that’s the first thing.

And the second one is the distribution channels that it takes. if you think of the distribution channel that it takes to onboard over a period of time 20,000 doctors, for example, onto your software. What it takes to onboard 5,000 microlenders onto your software, teach them how to use it, how to improve their businesses through it.

If you look at our Netstar business, you deal with the majority of insurance partners, over 150 dealers, etc. And then obviously there’s the data part, which I’ll touch on a little bit later.

I think it’s quite important for people to understand that competitive moat. And listen, we’re also paranoid, we also feel we’ve just begun, right? Nobody has the right to win all the time. So it’s something that we reinvest in all the time.

The businesses, they’re all unique businesses, they’re distinct businesses and we’re very clear about that, right? You would have met or seen online some of the MDs of those businesses and we run them in a federated fashion. The fact that we are multi-platform and in these different vertical industries is part of our strength.

Where the synergies come in, I would say it’s across three things.

The one thing is, particularly when it comes to enterprise customers, our opportunity is to service enterprise customers better when those businesses work together.

To give you just a practical example of that, if you combine consumer data in fintech with movement data in Netstar, to healthcare data in the HealthTech business, and you’re able to get insights from that to, for example, an insurer to really personalise a product offering for you, that’s quite powerful.

The other part is the reason why we’ve invested in the AI factory is really to bring that kind of power locally to South Africa, not necessarily as a standalone money-spinner. We don’t have the intention to become a GPU-as-a-Service company or business in South Africa. We leave that to the large-scale capital operators who want to do that. But we really see that as an enabler of business.

I really think it’s probably a little bit of customer cross-selling, more in the enterprise space than in the consumer. Because as consumers, you’d appreciate that’s a very distinct offering that they get.

The second one really is how we use data across those businesses to really add value to the service offering.

The third one is really how the AI factory underpins that because essentially what it helps us to do is to scale those offerings and also things like servicing our customers, better operational efficiencies within those business, just quicker and at a lower price point.

The Finance Ghost: Let’s take the conversation to that AI factory, because as you’ve quite correctly pointed out, nobody has the right to win all the time. It actually doesn’t matter how long you’ve been at this for.

This AI era feels like we’re all just a big startup now. No one knows, right? Got all these IPOs coming. Anthropic, OpenAI, SpaceX… it’s all happening.

And Claude released a new model literally last night. I see lots of people on my feed talking about how their token usage is now just ridiculous and it’s obliterating their plans. We’re going to start to see some price discovery around tokens and what AI actually needs to cost to be sustainable.

So, lots going on here clearly. And you’ve taken a slightly different route, which is to say we want to at least develop a fair amount of this internally, if I understand it correctly, and you’ll have to forgive me, I’m not a techie. A lot of my listeners are also not techies. So that’s why it’s actually quite helpful because if I am not 100% sure, they probably aren’t either.

So maybe just talk to us about exactly what the AI factory is internally, and also how it competes for capital. Because that was a fun thing that came through at the CMD, I think. The CFO specifically said there’s no blank cheque for this. It competes for capital like any other division in the group.

So, what exactly are you building there and why is it exciting?

Werner Kapp: Great question. Very, very simplistic answer: it’s not AI that we’ve developed. So, the technologies that we’re using are Nvidia, which I’m sure would be well known to most of the listeners. That’s the core hardware and software part of it.

The large language models that we use, we call them curated models, which kind of means, listen, they’ve pre-built that model for specific use cases.

A very simple one, for example, is insurance claim processing at scale. It’s done by AI rather than by human beings, and that’s done at a much quicker efficiency level. They’re, what we can then do for customers, is take that curated model and then you obviously build a specific, what people call “agentic AI”.

You train that model very specifically. The model will discover, okay, this is how the data sets and the rules work in my business. The way Andy Mabaso, our CTO, describes it is essentially what a large language model gives you is 200 PhD students at your fingertips to do this stuff at scale.

What specifically the AI factory is, it’s just a local instance of that. So, SMEs, people are consuming this service from companies from abroad, so subject to exchange rate, et cetera.

Big issue is also data sovereignty for people and security, right? We’re seeing that a heck of a lot more.

So, all that this really is, is a local instance of Nvidia and its models. It’s in a world-class data centre. We partnered with Teraco, it’s just around the corner. It really just gives us the advantage for ourselves and our customers to be quite flexible, quick speed to market.

There are obviously some dollar-based cost components to it, but we own the base infrastructure, if that makes any sense. So, it can scale at a lower cost. And of course, the models (I mean you talk about consumption of tokens), they are subject to whatever the cost structures may be of those providers. But it really just gives us data sovereignty and speed to market.

What it means for us as a business is twofold. And I suppose I’ve touched already on one element of it: significant deployment of that within specifically our platform businesses. Not exclusively, but naturally those kind of businesses, high volumes of transactions on a daily basis, often fielded by humans who are constrained by their capacity, kind of naturally lends itself to the deployment of AI. So, we are deploying that within our business to service our clients better.

Just to give you an example, Netstar receives 505 million data messages a day. And it’s very important for us to interpret those data messages at scale. So, for example, do we get false notifications? If you’re a Netstar customer, you may often get a call saying we’ve received an alert, press one if it’s a real situation, that kind of thing. So the AI factory is helping us with that kind of stuff.

In the fintech business, it’s helping us analyse, for example, things that we call strike date analysis. So, for the microlending software business, it is really quite important. What is the right time of the day, by the way, to the hour, for debit orders (as an example) to be successfully collected. So we’re doing a lot of that stuff.

And then through Altron Digital Business, which is our systems integration business, we have a large data and AI practice. And that data and AI practice really uses not exclusively the AI factory. It could also be using other enterprise AI tools, obviously Copilot for example, if you’ve got a large Microsoft installed base.

There we really help our customers. So, it’s sort of a consulting engagement where we really help our customers. Because a big question on everybody’s lips, and you kind of touched on it early on, right, which is: it’s fantastic, there are these amazing things, but how does that ultimately get deployed within my organisation at scale and improves the bottom line?

So, I hope that makes sense. That’s kind of the two elements to it, internal usage and then really helping our clients deploy AI better.

It competes for capital the same as all of our other businesses really compete for capital. When guys are asking us for capital, we have hurdle rates, we look at what the returns can be, what are the time periods for those returns. So that’s kind of a simplistic process.

Although sometimes, to be honest, you take a bit of a punt sometimes, right?

On the AI business case, that wasn’t that simplistic. When guys compete for capital, for example, in our Netstar business, we deploy a lot of capital into the capital rental devices. That’s the tracking device that enables the service. That’s a no-brainer, right? We understand the payback period of that exceptionally well.

It’s not that clear necessarily what the payback period is going to be for AI factory. So, there’s a simplistic competition for capital, which is really based on your normal kind of capital. What kind of IRR are you going to get in how quick a period of time?

But things like AI, we just felt that it’s really, really important for us as a business to get to know this stuff quickly. And that’s a bit of an explorative journey. I think the commercialisation of that is starting to become obvious to us, as I said, within the businesses.

So now what happens is we have KPIs. Each member of our executive team has a KPI that says I have seen two or three specific use cases for AI in my business. So, we’re starting to see that come through and that’s how we can measure it. And then the other one is obviously revenue, particularly within our Altron Digital Business in that data and AI practice. So, if that means that we’ll deploy more capital as it becomes more successful, we will.

But as I said, the intention of this is not for us to be a provider of hardware and software AI services necessarily at scale. We don’t believe that that’s our focus. We’re a capital-light platform-type business. And this really helps drive that.

The Finance Ghost: No, absolutely. That makes a lot of sense, and I completely agree with you. Obviously sometimes you just need to take a punt, right?

If you’re out there building a business instead of just running it on spreadsheets somewhere, you’ll understand that the only thing we know for sure about forecasts is that they’re wrong. That’s all we know for sure.

We just hope to figure out why they were wrong and maybe “what do you need to believe for this to be true?” and that kind of stuff. But it’s going to be wrong. Especially in tech, I think everything moves so fast, right? What choice you have, you need to not be left behind.

Werner Kapp: I’ve been in tech for 30 odd years now, and I think that’s the exciting part of tech, to be honest. But you do need to have an innovative, entrepreneurial-type spirit to do that, which we encourage in our businesses. And look where we’re really fortunate is that I think you opened up with the 90%/91% annuity revenue.

So that’s really powerful and we think it’s a big part of (a) our competitive moat and (b) our value proposition to investors is that in any given day (and listen, things can go wrong – you could churn some of that revenue, so that’s something we look at), but on any given day, when we open our doors in a financial year, 90% of our revenue is pre-booked.

So, it makes our earnings quite predictable. It’s highly cash generative also and that means that I think it gives us a little bit more flexibility around capital allocation and making those longer term bets because hopefully it goes without saying that as much as of course you always have to try and deliver short term numbers and earnings, we’re here to build a sustainable business, right?

We’ve been around for 61 years and that’s maybe when you asked the earlier question around, what are those synergies between those businesses? The other synergy, it’s maybe slightly more boring than data, but it is capital allocation.

People have often asked us as an example, why don’t we list the Netstar business?

And the answer is, well, we don’t need to do right now a capital raise to be able to grow that business going forward. Because we’ve got this combination of highly cash generative businesses and that gives us an ability to be able to be selective.

Our competitors play in one space. They can only allocate capital. They don’t have all businesses that are competing for capital, and you can deploy it where you see the best return and the best opportunity to build out your moat over time.

The Finance Ghost: When you’re innovating off that level of annuity revenue, it’s like working hard all week and then having a good time on a Friday night. You know, you’ve earned that right. You’ve got the base done. It’s when you don’t have any of the annuity revenue and you are out on the jol on a Monday at lunchtime, that’s a problem. You know your week’s going to be bad. It’s a great position to be in.

Werner Kapp: I just wanted to mention about the annuity. Firstly, you can never take that for granted because my annuity is someone like yourself who has entrusted us with a service to protect their assets or your car or your family, right? So I think that’s the first part.

And then the other part is there are parts of our business, your IT services business. You talk about working hard during the week and going on a jol over the weekend. You know, there our annuity business is about 50%/51%. So that’s a different ball game. Margins are a lot lower and you literally work on this kind of three-month billing cycle.

So, every Monday there, to use your analogy, you go to work with a hangover, but you’ve got to pitch up and you’ve got to be out there and you’ve got to do new deals. It’s not that we don’t love that business. And that’s the world that I come from. And that’s probably, by the way, why I appreciate that annuity business more than anybody else, because I’ve spent 25 years in businesses where we always used to say, “Right, it’s the new month, we’re back to zero, let’s go back and fill up that pipeline”.

And I think if you get that combination right, almost fanatical, if that’s the right word, attitude towards servicing your current customers.

Like I said, I come from a world where can you imagine losing part of that 51% base? So I think if you can get that combination right and then be really, really focused around acquiring new customers or new subscribers, which, touch wood, we seem to have done reasonably well over the last four years, then you’ve got a great business.

The Finance Ghost: Yeah, absolutely. Look, it’s your fault that I’m using these jolling analogies because your capital markets day had this wonderful EDM music playing in between. And honestly, the management team strike me as just great people to have at a braai, especially your CTO. Thoroughly enjoyed him. So just a cool culture. I can see it across the group.

Let’s maybe move on from that then and talk a little bit more about the financial stuff. So, tech companies unfortunately have a little bit of a reputation of being willing to chase revenue at almost any cost. More the international players, but still. Stuff like margin, cash flow, this sometimes takes a backseat in pursuit of growth.

I don’t get that sense at Altron, which is great and I’m very happy to see it, but that doesn’t mean that you don’t have some sources of margin pressures. So, one of the things that came through at the CMD, for example, is the marketing spend at Altron.  

Obviously your big listed competitor, we’ve seen their margins do a little bit of this (for people who can’t see me, obviously, which is everyone, up and down, up and down based on marketing spend and investing ahead of growth and that kind of thing). So that seems to be a feature of that market.

Fintech platform – also vulnerable to fee compression, especially as you see competition in verticals like informal merchants really heating up. Everyone’s talking about that Kasi economy now. I saw you reference GG Alcock on the day. That guy is getting all over the place at the moment because everyone is so interested in the space. Well done to him.

Perhaps you can just take us through your group’s overall approach to market share versus managing margin, how you prioritise these things and just how you think about keeping the income statement in one piece in what is essentially a very exciting world.

Werner Kapp: That is a heck of a good question, firstly. We’re not a tech company that chases revenue at all costs. And the reason why I say that is, tech companies who kind of chase revenue at all costs are companies where, because the world is evolving so rapidly, the reality is to be a successful global tech company, you’ve got to be first to market and you’ve got to sew up that market and that ecosystem as quickly as you can.

And there’s multiple examples of that. So, we’re not that tech company. We deliver digital services and we’ve discussed the fact that we’ve been around for a while.

Having said that, the struggle is real. Absolutely.  The balance between revenue and margin is real. Again, where we are quite lucky in the platform businesses is the unit economics, obviously. Your fixed cost base is fairly stagnant and as long as you’re adding subscribers to that base, you get a margin uplift.

Having said that, it is a blend. You’ve got to get both right. Because in any given year, we can switch off our cost base and make a heck of a lot more profit. But what are you going to do over the next two or three years?

To touch on that, certainly at Netstar, (which is what you referenced), we have doubled our marketing budget there, particularly in consumer.

I don’t think I have a simple answer for you. There is margin compression risk. We were quite clear to the market in our capital markets day. People were asking us around our margin guidance in the platform segment. They asked, “Why is it so conservative?” And we said, “if we have to defend our territory and that means short term margin compression, we will. But also, if we want to invest now for growth that we think is going to pay off three years from now, we’ll do the same”.

Not a clear answer, but it has been a big focus of ours. If you’ve looked at any of our results presentations, we talk about growing revenue whilst improving operating leverage.

At the same time, we’re quite fastidious about cost management. Wasted costs. When we did our property consolidation, we reinvested about 80% of those savings in our ability to service our customers in sales and people and in leadership. But I also find that corporates can waste a lot of money if you don’t keep an eye on it.

It’s kind of the normal business triangle: revenue, margin and cost. But we would not like revenue at all costs. I suppose that’s the simple answer. We wouldn’t like to have revenue at all costs. But if somebody’s going to come in and go after that 91% annuity base of yours, and you’ve got to take short term measures to defend that base, then we’ll do that.

The Finance Ghost: I would imagine that’s also one of the benefits of just having these platforms all together in one group, is they’re going to be at different stages in their life cycle. This one might need more capital right now, that might hurt margins for a little bit, while that one’s reaping what they’ve sown and their time will come.

This gets to then just come through in the wash because that’s the reality – people will always ask you for more specific guidance and especially institutional analysts will always try and really dig down – but there’s only so much you can share publicly because your competitors are also listening, absolutely, and are trying to figure out what you’re doing.

So that’s also the nice thing with having all these different platforms, right? By the time it all rolls up, it’s a number. But there’s a million underlying business decisions that have led to that.

Werner Kapp: That is why I specifically spoke about the fact that we believe this is unique and we believe that this is our differentiator. You’re 100% right. We’re across vertical industries. That means that you could not cross-subsidise, as I said earlier on, the cash generated.

You can make the right decisions in business and you can say, “Look, this business is not going to have the greatest year necessarily from a revenue growth perspective, but that’s fine”. The other one is going to.

We really, really believe that is a unique advantage that we have. And as to guidance and disclosure, our guidance and disclosure are very good. We’ve certainly taken the market through a lot of detail, and all this stuff is available. But yeah, you do walk quite a fine line between disclosure and competitive information.

And ultimately, we’ve got to build the best business that we can, and we’ve got to deliver to our customers and our shareholders. And if we do that, I think sustainable earnings growth is something that comes along with it, over a period of time.

The Finance Ghost: Yeah, I agree with that fully. I’ve got two more questions for you, just based on some of the specific verticals in the business.

So, the first one is Netstar. One of the opportunities that came through very strongly from your managing director in that space was the benefit of working with the OEMs (Toyota was the specific example) vs. just relying on, for example, someone goes and buys a used car, and they then contact you or whatever.

Now, obviously your cost of acquiring a customer must be much better if you’re grabbing them at OEM stage. The car just comes with this thing, which is a very different world, obviously, so I can see the appeal of that.

But a lot is changing in the South African automotive landscape around the Chinese brands and local manufacturing. Maybe it’s a very simple answer. Maybe the answer is you’re not really seeing an impact. But the shape of our roads has just changed completely. The brands, et cetera, et cetera.

Are you seeing any kind of impact in Netstar from, for example, the shift from used vehicles to now these more affordable new vehicles? Or is the business just kind of carrying on regardless of what asset you’re protecting?

Werner Kapp: There definitely is an impact. Maybe just to give a little bit context to that, Netstar essentially has three channels to market. One is direct. Somebody essentially calls you or contacts you and asks you if you want a Netstar subscription. The other one is through the insurance channel, and then the other one is through the dealership directly.

The ratio between new cars and used cars in South Africa has shifted. The attractiveness of price point of the Chinese cars and then probably some tailwinds from an interest rate perspective as well. But I think the price point attractiveness of the Chinese cars certainly the big reason.

But for us, remember we got these kind of multiple channels. So, firstly we’re very proud to be the exclusive tracking partner to WeBuyCars. So that gives us access to a broad range of vehicles, and you might have heard them also speak about what they see as the impact of Chinese cars to their business, and how they’re going to deal with that in the longer term.

Obviously, we are also onboarding the dealerships of the Chinese cars, so it’s a bit of a swings and roundabouts for us. We’re agnostic from providing a service to a consumer perspective of what exactly the brand of car is. And obviously we provide those services to used cars, new cars and large fleets in rental companies.

So really, we don’t see it as an existential threat. We see it more as an opportunity and ultimately it comes down to making sure that we get the execution right of our sales and service channel. Particularly in the dealership channel, which we’re working very hard on.

The Finance Ghost: For listeners who are interested, if you go back actually just a few weeks, you’ll find a podcast with the WeBuyCars management team where they did talk a lot about the Chinese cars. It is very interesting. So go and give that a listen.  

Last question while I still have any voice left at all. I’m going to talk about the fintech business now, and this major regulatory overhaul that could give the non-bank fintechs direct access to the national payment system as I understand it (again not an area of expertise for me, but that’s as much as I understand).

That could do wonders for the cost of sales in your fintech business. That’s something that I picked up from the CMD. Just give us an idea of the opportunity here and what this means for fintechs like you?

Werner Kapp: There’s a number of opportunities. It creates new avenues for new services, that traditionally only banks could render, that the fintechs could render.

But probably the biggest short-term opportunity for us is that today – I don’t necessarily know that that will fundamentally change in the longer term, I think there could just be cost compression – but we need a sponsor bank to be able to access the payment rails. And that is close to about 80% of our cost of sales in our fintech business.

If you don’t need that sponsor bank, which like I said, I don’t think will completely disappear. And remember, there’s a cost associated with actually buying these payment activities. But ultimately for us there is a significant margin uplift opportunity in the medium to long term.

The Finance Ghost: So maybe as a parting comment then, Werner, and thank you so much for your time today. Why do you believe investors should be paying attention to Altron as you enter this phase of your growth story now?

Werner Kapp: We’re exceptionally well positioned, I think, in this burgeoning digital economy of South Africa. We’re exceptionally well positioned in both the formal and the informal market.

The second one is the multi-platform businesses that we have. We get a little bit of a diversification across a number of vertical industries. And then of course, the 91% annuity revenue.

And then we have a very strong balance sheet. Our balance sheet is ungeared. So that gives us a lot of flexibility to invest ahead of the curve and do acquisitions should we have to. We haven’t seen the need to do that yet.

And last, but certainly I don’t think least: it’s a little bit of an intangible. But I’m a big believer in leadership and culture. We’ve got an exceptionally committed, experienced leadership team with a proven track record.

They’re very proud of what we’ve achieved, but even more excited about the next phase of the journey and we certainly love investors to come along for the ride.

The Finance Ghost: Well, congratulations to you and the team on what I think is a pretty exciting South African growth story and from my side as well, just well done on doing a capital markets day.

And this is a challenge that I’ll throw out to corporate South Africa is: do more of these things, because it’s a wonderful opportunity to bring your story to the market and to actually let people see your divisional execs. Because we don’t often get that experience.

Very, very well done. Congrats, all the best on this.

And to the listeners, obviously make sure you go and do your own research. This should just be part of your process of learning about Altron and figuring out if this is perhaps for you.

And either way, Werner, thank you so much for your time. It’s really, really cool. I hope we’ll do another one of these at some point. All the best with the strategy.

Werner Kapp: I’d love to. Thank you very much. Thanks for your time, really enjoyed it.

Ghost Bites (Afrimat | Fortress Real Estate | MTN | SPAR)

The Finance Ghost
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Ghost Bites (Afrimat | Fortress Real Estate | MTN | SPAR)

In this edition of Ghost Bites:

  • Afrimat is selling off some quarries and concrete plants for R215 million
  • Fortress Real Estate is ticking over nicely
  • MTN sets out Ambition 30 at its Capital Markets Day
  • SPAR hits rock bottom – hopefully

Afrimat is selling off some quarries and concrete plants for R215 million (JSE: AFT)

They needed to do this from a regulatory perspective anyway, but it’s a welcome injection of capital

Afrimat’s share price is down 23.6% year-to-date, with this previous market darling now suffering at the hands of investors. Or perhaps investors are suffering at the hands of Afrimat?

Either way, it’s not pretty.

There are many reasons for the decline, with Afrimat’s recent reporting having demonstrated the perfect storm faced by the company.

I must disclose that I recently bought into Afrimat after it was announced that the smelters are being thrown a lifeline by NERSA and Eskom. Time will tell whether I made the right call.

In the meantime, the latest news at Afrimat is that they have found a buyer for certain general aggregates quarries and readymix concrete plants. They needed to divest these assets as part of the conditional approval by the Competition Tribunal for the acquisition of Lafarge South Africa.

The buyer is Saturc and the price on the table is R215 million. A cash amount of R160 million is payable on closing (1 July 2026) and the remaining R55 million is payable over three years. That’s a fair split.

The announcement doesn’t give any financial information on the assets in question.

Ghost Bite: It would’ve been nice to have information on the profitability of these assets. My suspicion is that because Afrimat was a forced seller here, the economics of the deal probably aren’t amazing. On the plus side, it’s an injection of cash at a time when Afrimat could do with some capital flexibility.

Fortress Real Estate is ticking over nicely (JSE: FFB)

They are delivering real growth for investors

Fortress Real Estate has provided a pre-close update dealing with the year ending June 2026. Remember, this is a complex portfolio that includes directly held assets in South Africa and Central and Eastern Europe (CEE) worth R36 billion, as well as a R14.4 billion stake in NEPI Rockcastle (JSE: NRP). There is also a small non-core portfolio of office properties worth R681 million.

The direct portfolio is strongly weighted towards logistics properties (R24.1 billion). With vacancy levels in South Africa and CEE of 1.4% and 1.8% respectively, these assets continue to provide a dependable income stream. Vacancy rates tend to be lumpy due to the size of the underlying warehouses. For example, the increase in the vacancy level in South Africa from 0.3% to 1.4% is thanks almost entirely to one warehouse at Eastport Logistics Park.

The retail portfolio is only in South Africa. Like-for-like tenant turnover growth of 4.2% seems reasonable in the context of recent numbers we’ve seen from retailers. The vacancy rate is just 0.8%, excluding the recently acquired 51% stake in Balfour Mall, where the vacancy rate is extremely high at 45%. This is clearly a property in need of a turnaround strategy, but they got it on a yield of 10% based on existing tenants. No value was placed on the vacant 45%, so the upside potential is clear!

In the non-core office portfolio, vacancies improved from 25.7% to 22.1%. Although Fortress likes to sweep this portfolio under the carpet, only two of the 14 properties are classified as held for sale. Perhaps the market is just too weak for them to be offloaded any faster?

Speaking of disposals, Fortress isn’t shy to recycle capital. They have disposed of R362.4 million worth of properties in this financial year, with the pricing reflecting a 5.5% premium to book value. Properties worth R277.4 million are currently classified as held for sale.

This is important, particularly as Fortress engages in ongoing development activities to grow the portfolio. Capital discipline is a critical element of this strategy. The development projects are a mix of speculative builds (no confirmed tenant yet) and builds to spec for confirmed long-term tenants.

To help fund these activities, Fortress has a successful DMTN programme on the JSE that allows it to raise debt. For example, they raised R1.6 billion earlier this year in the form of a 7-year note. The current loan-to-value ratio at the fund is roughly 38.8%.

Fortress Real Estate’s guidance for FY26 has been reaffirmed. They expect a distribution of 176.48 cents per share, which would be 8.6% higher than FY25.

Looking ahead to FY27, there’s a further 7.4% increase. The nuance is that the FY27 forecast is based on total distributable earnings, not the distribution per share. In other words, that percentage would change if Fortress either issues or repurchases shares.

Ghost Bite: It’s less about the exact forecast and more about the approximate growth rate. These are high single-digit increases, which means that Fortress is doing a great job of providing real returns to investors (i.e. in excess of inflation).

MTN sets out Ambition 30 (JSE: MTN)

And if there’s one thing they aren’t short of, it’s ambition!

MTN is hosting a Capital Markets Day this week. It’s actually a two-day event, which shows you how much they need to get through!

Naturally, if you want the full details, then you need to check out this link and work through the slides. I always recommend that you spend some time doing this, as there is much to learn from the Capital Markets Day decks.

This particular event is to take the market through the new medium-term targets. We’ve now moved from Ambition 2025 to Ambition 2030. The starting point for Ambition 2025 was the 2020 financial year, which was a Covid-infested mess, so the five-year track record of delivery was obviously given some additional help by the choice of base period.

Still, MTN deserves a lot of credit – they’ve made immense progress in recent years. Subscribers jumped from 258 million in 2020 to 307 million in 2025. Adjusted ROE climbed from 17.0% to 25.6%. HoldCo leverage is perhaps the most impressive story, down from 2.2x to 1.3x!

Today, just 16% of HoldCo debt is non-rand denominated. Back in 2020, that number was 48%. MTN has transitioned from fighting for its life to telling an exciting growth story.

The underpin of Ambition 2030 won’t be a surprise to you. Africa is an extremely fast-growing region that offers a mix of economic and population growth. More humans require more connectivity over time. Therein lies the opportunity, with financial inclusion and AI as further tailwinds.

Here’s a number that really brings that message home: smartphone penetration in Africa is expected to jump from 53% to 2025 to 84% in 2030. Now imagine what this means from a FinTech perspective, as Africa continues to move from cash to digital transactions.

There are other growth engines as well, like MTN’s modest share of the total addressable market for SMEs on the continent.

To address this opportunity, MTN is organising itself around three platforms. The first is MTN itself, which delivers connectivity. The MoMo business is the FinTech play, and I’m pretty sure the next few years will see a separate listing of that business as a value unlock. The third is bayobab for digital infrastructure (the recent IHS acquisition and other services).

What does this all mean from a financial perspective?

The expectation is that service revenue will grow by at least high teens over this forecast period. This expect this to drive margin expansion as well. But here’s the chart that I think tells the story the best, extracted from the financial presentation at the event:

Ghost Bite: We live in a very exciting place. Africa is a risky business environment where governments do their very best to make it tough to do business. But when governments just stay out of the way, companies like MTN can unlock serious growth. Macro tailwinds on the continent help as well – long may they last!

SPAR hits rock bottom – hopefully (JSE: SPP)

The latest financials show the extent of the problems

SPAR released results for the 26 weeks to 27 March 2026. The market had already been warned that they are shocking. Now we can see just how rough SPAR’s reality is, with an operating profit margin in Southern Africa of a paper-thin 0.5%!

Let’s start right at the top, where revenue from continuing operations increased by 3.6%. Group gross profit margin dipped from 10.7% to 10.5%. Operating profit has tanked from R1.35 billion to R741 million. HEPS is even worse, down 53.9% to 199.9 cents. Sigh.

The balance sheet is also a major concern, with group net debt up from R5.4 billion to R7.3 billion. Some of this is due to the timing of creditor payments, but there’s also a worrying story about weak EBITDA and how this has impacted group cash flow.

SPAR’s group balance sheet is running a leverage ratio of 2.73x. Leverage in South Africa is too spicy for my liking at 3.29x, with little headroom vs. the covenant of 3.50x.

The segmental analysis really tells the story here.

The Southern Africa business was impacted by many factors, including the ongoing woes of the KZN distribution centre (a R123 million impact on operating profit) and what the group describes as “promotional overspend” on Black Friday (a R212 million impact). There are also concerning metrics regarding the health of the independent retailers and the resultant impact on SPAR’s debtor book.

There was very little revenue growth in Southern Africa to cushion the business against these blows. Revenue was up just 1.7%. Grocery and liquor wholesale revenue could only manage 1.1%, while Build it was good for 1.3% growth and SPAR Health achieved an impressive 26.1%.

Here’s the real crisis: gross profit in South Africa was down 1.4%, yet operating expenses jumped by 18.5%. This absolutely crushed operating profit, down 60% to R396 million.

Retailer loyalty went backwards on a rolling 12-month basis, dipping from 78.9% to 78.5%. The relationship with the independent retailers remains very difficult, although the final months of the reporting period saw a stabilisation in the loyalty rate.

If we really dig for a highlight, then we can consider SPAR Rewards with sales growth of 9.3% year-on-year.

In Ireland, things were better than in Southern Africa, although that’s hardly saying much. Revenue was up 2.2% in euros, with gross margin up 20 basis points to 13.7%. Operating profit inched higher with a 0.8% growth rate. Thanks to a decrease in debt, there was a decline of 22.8% in net interest.

I don’t think anyone really cares about the joint venture in Sri Lanka, but I’ll mention it for completeness. Revenue growth was 7.6%, but operating profit fell year-on-year. With 12 corporate stores and 13 independent retailers, I’m not sure why they are bothering in that country.

Is the day darkest before the dawn?

Well, I keep asking SPAR for a Capital Markets Day to give the market access to the divisional executives and their plans. In the absence of such an event, we must rely on the strategic commentary provided by SPAR in the announcement. With the share price closing 5.9% higher on the day, the market seemed to be cautiously optimistic.

Aside from the SAP Finance go-live in the next period (I’m sure that will be a nervous moment), the group is taking steps to control marketing spend (there’s a new return on investment framework) and drive better procurement in an effort to protect margins and working capital.

They are also going to (finally) figure out a local store proposition on SPAR2U. Literally the only differentiator at SPAR is the community-focused nature of the franchisees. If they can find a way to deliver that value proposition digitally on a store-by-store basis, they just might have a chance.

I would certainly be a customer of that effort, if they get it right. I have an excellent SPAR a couple of kilometres from my house, but I have to go past a Woolworths Food and ignore the Sixty60 alternative in order to go there. SPAR2U solves that gap.

In the meantime, there’s obviously no interim dividend for shareholders. SPAR needs every cent they can get as they head into the second half of the year.

Ghost Bite: My tiny speculative position on SPAR has gotten a lot smaller. And I’m not adding to it until I see more compelling strategic plans from the group. SPAR2U is the ultimate test for me. Personalising the digital experience for each store won’t be easy. If they can achieve that level of execution and data integration with stores, then SPAR just might have a chance. If not, then it’s hard to see much of a future here.

228
What do you care more about at SPAR?

If you could fix just one thing at SPAR...

Results of previous poll:

Nibbles:

  • Director dealings:
    • Although the CEO of AVI (JSE: AVI) opted to sell only the taxable portion of his share award, a different director sold his entire award worth almost R2 million.
    • Four directors of Spear REIT (JSE: SEA) elected the dividend reinvestment alternative to the value of R465k. This isn’t quite as bullish a signal as a normal on-market trade, but it still speaks to alignment with management.
    • An entity associated with the CEO of Africa Bitcoin Corporation (JSE: BAC) bought shares worth almost R250k.
  • Shuka Minerals (JSE: SKA) announced further updates from the drilling at Kabwe Zinc Mine. As usual, unless you’re a geologist, the announcement will mean almost nothing to you. I always skip to the CEO commentary in these scenarios, as I know absolutely nothing about mining geology. It appears as though the CEO is pleased overall, so that’s encouraging.
  • Novus (JSE: NVS) has acquired another R74 million worth of shares in Mustek (JSE: MST). This significantly increases their direct stake, from 41.85% to 50.39%. Together with concert parties, they now hold 70.68% of shares in issue.

Ghost Bites (Araxi | Jubilee Metals)

The Finance Ghost
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Ghost Bites (Araxi | Jubilee Metals)

In this edition of Ghost Bites:

  • Araxi investors have been reminded of the lumpiness in the business
  • Jubilee Metals is ramping up the Molefe Mine

Araxi investors have been reminded of the lumpiness in the business (JSE: AXX)

The growth story has suffered a wobbly

It’s rare to see a single chart doing a great job of explaining the underlying theme in a set of numbers. But I think this one is rather effective:

As you can see, the year ended March 2026 won’t go down as the happiest time in Araxi’s journey.

The period shows us an important risk in the business: the dependence on microchips in payment terminals. As anyone following the tech industry will know, microchips are becoming an increasingly rare and expensive commodity thanks to insatiable demand from the AI sector. This led to a delay in the delivery of a substantial customer order, with revenue from the sale of terminals dropping from R308 million to R230 million.

Another source of lumpy revenue is software licence fees. There was a once-off fee of R42 million in the base period, so this line item fell from R118.5 million to just under R77 million.

Together with general economic headwinds, these issues led to a 6.8% decline in group revenue. EBITDA fell by 16.4% and EBITDA margin contracted by 270 basis points to 24.0%. HEPS was down by a nasty 18.2%.

As a consolation prize, the dividend per share was kept steady at 12 cents per share, as you saw in the chart above. HEPS was 14.37 cents in this period, so there’s not much more wriggle room in that payout ratio.

This is a textbook example of the “stickiness” of dividends and how management teams would rather sell their first-born children than cut the dividend.

Araxi also presents a set of “underlying” numbers that make several adjustments. Other than splitting out that lumpy software fee, they also take out restructuring costs in the Software division, reverse transaction costs for the Pay@ deal and make other fair value and classification adjustments.

If you’re willing to go with that view, then revenue was down 3.6%, but EBITDA was up 5.9% as the margin expanded by 220 basis points. HEPS was up 10.1% through this lens. But don’t get too excited: this “growth” is because the base period looks far less demanding after these adjustments, rather than because FY26 is suddenly excellent. In fact, adjusted HEPS is 14.03 cents on this basis vs 14.37 cents as reported!

If you look through all the noise, there are a couple of highlights worth noting. The first is that despite the delay in terminal deliveries, the number of terminals in the hands of customers has increased by 5.4%. The second highlight I would consider is that the Software division saw a 77% increase in underlying EBITDA thanks to restructuring initiatives.

Still, this isn’t the set of numbers that investors wanted to see as the foundation for the Pay@ deal, in which Araxi has taken a considerable risk on a major acquisition. They’ve acquired an 80% stake for a meaty R1 billion, funded by R200 million of existing cash reserves and R800 million in senior debt. This takes them to a net debt to EBITDA ratio of 1.6x after the closing of the deal.

On a pro-forma basis, the contribution of the Payments division increases from 56% of group revenue to 66%. EBITDA moves up from 93% to 90%. The Pay@ deal takes them much deeper into the fintech and payments infrastructure in South Africa.

Given the complexities of the Software space at the moment, you really have to wonder why they don’t dispose of that business. It’s an even smaller contributor than before, yet it remains capable of dishing up headaches and distracting management. Even with all the work they’ve put in, the “underlying revenue” in Software was down 1.5% year-on-year!

There’s an interesting trend that comes through in the analyst presentation, which was also visible at the Altron (JSE: AEL) Capital Markets Day that I watched online. POS devices (payment terminals) are becoming more than just payment acceptance tools. They now include value-added services like inventory apps, which allow small merchants to track stock on their payment machines. With 64% of revenue in the Payments business being of a recurring nature, it’s critical that Araxi retains customers through delivering innovation.

Ghost Bite: This is a new era for Araxi. Instead of running a fortress balance sheet, they are now in a position where financial leverage can work against them in a weak period. Payment terminal delivery delays may be out of their control, but it’s a reminder of the layers of risk faced by the business during this AI supply crunch. This is going to be an interesting story to watch!

Jubilee Metals is ramping up the Molefe Mine (JSE: JBL)

Will investors like the “hub-and-spoke” development model?

Jubilee Metals released an operational update regarding the Molefe Mine in Zambia. This asset is key to the group’s mine-to-metals copper strategy.

After the successful expansion of Pit 2, run-of-mine deliveries to Sable refinery have recommenced. The targets move up quite quickly, from 6,000tpm in June to 10,000tpm by October 2026.

They are working on the integration of Pits 2 and 3 into a single enlarged open-pit operation. Once this is complete, they should be delivering more than 30,000tpm each quarter, an enormous jump from the previous level of 12,000tpm per quarter.

They describe their strategy in Zambia as being to mine while they explore, which means growing the production and resource base simultaneously. This means on-site ore sorting, processing capabilities and of course the Sable refinery as part of the value chain. They also describe it as a “hub-and-spoke” development model.

Ghost Bite: The share price moved slightly higher on this news, but remains 26% down year-to-date.

Results of previous poll:

Nibbles:

  • Director dealings:
    • The financial director of eMedia Holdings (JSE: EMN) bought shares worth R681k. To add to this bullish signal, a handful of other senior execs also bought shares worth around R750k in aggregate.
    • An associate of a director of Kumba Iron Ore (JSE: KIO) sold shares worth R85k.
    • It’s hardly worth mentioning, but an associate of a director of Finbond (JSE: FGL) bought shares worth R734. And no, there isn’t a “k” missing on the end.
  • Brikor (JSE: BIK) released a trading statement dealing with the results for the year ended February 2026. They’ve swung into a loss-making position, with a headline loss per share of between 1.0 cents and 1.2 cents vs. positive HEPS of 0.5 cents in the prior period.
  • Wendy Luhabe will resign as the Chairperson of the Pepkor (JSE: PPH) board, a position she has held since December 2020. Ian Kirk (the Lead Independent Director) will serve as the Chairperson until a replacement is named.
  • I’m not close to the details on this one at all, but those of you closely following Eastern Platinum (JSE: EPS) will be interested to learn that the Supreme Court of British Columbia has struck out all three claims against the company being made by a particular entity.
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