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Ghost Bites (Finbond | ISA Holdings | Mahube Infrastructure | Pan African Resources | Quantum Foods | Texton | Tradehold | Transcend Residential Property Fund)

The Finance Ghost
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Ghost Bites (Finbond | ISA Holdings | Mahube Infrastructure | Pan African Resources | Quantum Foods | Texton | Tradehold | Transcend Residential Property Fund)

Finbond’s losses have decreased (JSE: FGL)

But the group is still firmly in the red

When reading about a small financial services group listed on the JSE, it’s easy to assume that any troubles must be related to the local economy. In Finbond’s case, you would need a passport to go and find the problems.

Of all places, Illinois in the US has been the biggest headache for the group. Finbond needs to lend money to lower income customers and those customers were the beneficiaries of incredible levels of stimulus in the US. In a perverse irony of note, the US economy is too strong for Finbond to be doing well there.

To add to the difficulties, there were major regulatory changes in March 2021 in Illinois that caused problems for the business model, with a revised longer-term product leading to a lag effect in profitability. Simply, accounting rules require interest revenue to be earned over the period of the loan and credit loss provisions to be recognised upfront, so a period of strong growth in lending would actually have a negative impact on short-term profitability!

Now that your mind has been blown by good things that are actually bad things for Finbond, I can highlight the financial performance for the year ended February 2023. Revenue increased by 21%, gross loans and advances increased by 25.6% and the headline loss per share decreased from -17.9 cents to -15.1 cents.

There is yet again no dividend, which makes sense in the context of the headline losses.

I was surprised to see that no mention is made of net asset value per share anywhere in the announcement, especially as this is generally seen as a key input for valuations of financial services groups. Based on a very quick look at the market cap and equity on the balance sheet, it looks like a price/book of roughly 0.3x.

ISA Holdings displays resilience, if not growth (JSE: ISA)

The digital security group could only increase revenue by 1%

If you dig into the numbers of this technology small cap, you’ll see that ISA Holdings managed to tread water on the top line. The same can’t be said for operating expenses, which jumped by 22.5% largely due to payroll expenses. The company is clearly hiring, but the benefit hasn’t come through on the revenue line yet.

The net profit result was saved for the year ended February 2023 by a major increase in share of profits from associate DataProof, which increased from R1.6 million to R7.7 million. This made all the difference in profit before tax growing from R22.8 million to R26.4 million.

With all said and done, HEPS grew by 34% to 14 cents per share. At R1.35 per share, the business trades on a sizable valuation for a company with a market cap of just R230 million. The core business needs to show a much better margin story to justify that multiple.

Mahube Infrastructure: renewables aren’t easy (JSE: MHB)

They may tug at the heartstrings, but renewable energy projects aren’t guarantees of success

Mahube Infrastructure (JSE: MHB) has investments in a variety of wind and solar farms. It’s a small listed group, with a market cap of just over R300 million.

In a trading statement for the year ended February 2023, some of the challenges in this sector were laid bare. The fair value of the assets went the wrong way based on macroeconomic variables (like discount rates) and the adverse revision of long-term assumptions on the amount of electricity generated. I was surprised by the latter issue, as that is not good news for these types of projects.

The results were also impacted by a drop in dividend income, including from the wind investments that experienced adverse wind conditions during the reporting period.

Pan African Resources shareholders get a 21% hiding (JSE: PAN)

Production guidance has been revised sharply downwards

You won’t often see a significant local company receive a 21% smack from the market in a single day. Then again, you won’t often see a gold miner reduce its full-year production guidance by roughly 12.5% with just over a month to go until the end of the period.

If we compare the latest guidance from Pan African Resources to the midpoint of the previous guidance range, there’s a drop of 25,000oz. Approximately 10,000oz has been attributed to Eskom’s electricity supply, with the rest due to a slower ramp-up at Barberton Mines and lower than expected production at Evander Mines.

Renewable energy projects are underway, but these take time of course. The company also noted that the issues at Barberton have improved towards the end of this financial period. The problems at Evander Mines were due to geological challenges that take longer to deal with.

The only good news is that the Mintails project is expected to receive the last remaining approval imminently, which means plant construction can commence within the next month. Steady state production is expected by December 2024.

Thanks to strong gold prices, the group is still in a decent financial position and net senior debt could be reduced by as much as 50% since December 2022.

This period really is a case of what might have been, with production issues at a really unfortunate time when the gold price finally gave miners an opportunity to generate substantial cash flows.

Even looking ahead to the 2024 financial year, we see production guidance of 178,000oz to 190,000oz, which is still lower than the guidance of 195,000oz to 205,000oz that was on the table for the 2023 financial year before being reduced to 175,000oz.

The underperformance relative to peers is severe this year:

Quantum Foods is a lesson in margins (JSE: QFH)

Revenue growth doesn’t matter if costs have gone ballistic

The poultry industry is a wild place. I cannot think of another sector that is so volatile at net earnings level, with skinny margins that can vary for reasons far beyond the control of the companies in this industry.

In the latest interim period, revenue at Quantum Foods increased by 22.0%. It was cold comfort, as gross profit only increased by 6.6% and operating expenses grew by 8.4%. With such tiny margins in this sector on a good day, that was enough to smash operating profit by 57.4% and HEPS by 82%.

Quantum Foods describes the six months to March 2023 as the most challenging conditions since listing in October 2014. Across record high feed raw material costs, outrageous levels of load shedding and consumer pressure that makes it impossible to recover the costs through pricing increases on eggs, this has been a perfect storm for poultry.

The bigger issue is that there is no obvious improvement to any of these problems. The weak rand has a significant impact on raw material costs. We all know that Eskom has no solutions for any of us. Finally, it’s not like the situation is getting any better for South African consumers.

To give you an idea of how much more expensive it has become to raise chickens, the cost of layer and broiler feed increased by 30.3% and 27.4% respectively, while the selling prices for eggs only increased by 7.5% and volumes fell by 9%. There is a crisis brewing for South Africa’s core sources of protein.

If you’re hoping that Quantum has an exciting energy solution on the cards, you’ll be disappointed. The company is only at the point of having generators installed at its major sites, which of course only helps with availability of power rather than the cost thereof.

It gets worse before it gets better. Although this period wasn’t affected by avian flu, there was an HPAI outbreak in April 2023 at the Lemoenkloof layer farm in the Western Cape. Just this outbreak carries a cost of R34 million, which is frightening when headline earnings for the six months to March was just R6 million.

Unsurprisingly, there was no interim dividend for this period.

Texton moves ahead with the GEPF repurchase (JSE: TEX)

If you see a rights offer down the line, remember this day

This certainly isn’t the first time that Texton has had me scratching my head. The company isn’t exactly the gold standard in capital allocation track record, evidenced by a share price that is down roughly 60% over 5 years.

The latest unusual step is a massive specific repurchase of 19.8% of the shares from the Government Employees Pension Fund (GEPF), managed by the PIC. At a price of R2.15, this is a discount of 11% to the current traded price. That’s great for Texton shareholders and strange for the GEPF, as the net tangible value per share before the repurchase is a much higher R6.11.

It would make a lot more sense for the PIC to rather put pressure on the company to recycle capital and return it to shareholders, particularly with the price at such a high discount to the tangible NAV. I’m grateful that I have precisely none of my own money in the GEPF.

If Texton can actually afford this, it’s really good for remaining shareholders as they are getting rid of a big chunk of shares from someone else at a discount. My bigger concern is that the initial announcement around this deal mentioned a potential equity raise in future, which could then negate any benefit from this deal.

If you see a rights offer from Texton at any stage in the near future, just remember this repurchase price of R2.15 and compare it to whatever price the rights offer will be executed at.

Shareholders of Texton will need to approve the deal with a 75% approval required. It helps that Heriot Investments (with a 64.7%) holding has already agreed to vote in favour.

Will Tradehold regret its UK exit? (JSE: TDH)

Although losses were realised on disposal in the UK, things aren’t easy at home either

In November 2022, Tradehold sold its operations in the UK for just over R2 billion, realising a loss of R164 million after releasing forex reserves on the disposal. The proceeds were used to redeem preference shares held by RMB and pay a special dividend of R4.34 per share to shareholders in November.

This makes Tradehold a primarily South African group (73% of assets) so the reporting currency is now the rand.

Net asset value (NAV) per share has dropped from R19.47 to R12.40 over the year ended February 2022, of which R4.34 is due to the special dividend. This means that R2.73 is simply due to losses on the disposal of the UK assets and the general performance of the portfolio.

The highlight here is Collins Group, with a portfolio of mainly industrial buildings and large distribution centres. Net profit grew by 9% in this period, although the average increase on renewals was just 3% in this period.

Solar projects are obviously top of mind for distribution centres with huge roof areas. Collins is using a rental based model to roll out solar projects, so there is no capital expenditure outlay.

As a sign of the times, the group plans to increase its exposure to the Western Cape to 17% of the total portfolio, which still seems pretty low vs. 42% in KwaZulu-Natal and 39% in Gauteng.

A final dividend of 30 cents per share has been declared. At R7.99 per share, the discount to NAV is just over 35%.

Transcend Residential Property Fund flags higher earnings (JSE: TPF)

You need to read very carefully to spot the change in reporting period

In a trading statement released by the company, Transcend Residential Property Fund noted an increase of 28.29% in its dividend per share. That sounds extraordinary, until you realise that this covers the 15 months to March 2023 vs. the 12 months to December 2021.

So not only has the financial period been changed, leading to a once-off longer period, but the base period included plenty of Covid issues.

The growth rate is irrelevant here. Instead, the helpful information is that the dividend per share is 72.34 cents, so the trailing yield is 11.3% based on the current share price.

Little Bites:

  • Director dealings:
    • There is more selling in the gold sector, this time a prescribed officer of AngloGold Ashanti (JSE: ANG) selling R1.94 million worth of shares.
    • A name you won’t see in this section very often is Sea Harvest Group (JSE: SHG), so take note of an associate of an independent director buying R1.33 million worth of shares.
    • The CEO of Brimstone Investment Corporation (JSE: BRT) bought shares worth R254k.
    • A director of Calgro M3 (JSE: CGR) has bought shares worth R92.8k.
  • Choppies Enterprises (JSE: CHP) has renewed the cautionary announcement related to the potential acquisition of 76% in the Kamoso Group, an FMCG business in Botswana. The negotiations were originally for a 100% stake.
  • With all said and done on the Sanlam (JSE: SLM) – AfroCentric (JSE: ACT) transaction, Sanlam will hold 60% of the shares in AfroCentric. It will be interesting to see how successfully the strategy is delivered going forward, as substantial promises were made to AfroCentric shareholders about the benefits of this deal.
  • The odd-lot offer by CA Sales Holdings (JSE: CAA) lives up to its name in my books. After considerable effort to attract a wide base of shareholders, the company is moving ahead with an odd-lot offer to try and mop up the 5,073 shareholders who each hold less than 100 shares. It’s also possible that this base was inherited from PSG as part of the unbundling. This is just 0.02% of the company, so I can understand the administrative burden vs. the total shareholding. What I can’t understand is that the total value of those shares is roughly R860k and the cost of executing the odd-lot offer is R680k! I’m sure the maths has been done, but I find it surprising that the company is a net winner on this basis. It shows how expensive it is to have a retail shareholder base in South Africa’s regulatory environment, though I must point out that an odd-lot means fewer than 100 shares and that’s a value of just R700 at the current share price.
  • Hillie Meyer will retire from the top job at Momentum Metropolitan (JSE: MTM) on 30 September 2023. His replacement is Jeanette Marais, who has been Deputy Group CEO since 1 March 2018. This seems like a solid example of succession planning.

Happy Birthday ETFs I 30 years of democratising global investing

Sponsored Content
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Happy Birthday ETFs I 30 years of democratising global investing

By Fikile Mbhokota – CEO, Satrix

2023 marks the 30th birthday of one of the most significant financial innovations of modern times – The Exchange Traded Fund (ETF). In this time, ETFs have championed the cause of democratising investing, levelling the playing field by making it simple and accessible for all.

Three decades on, these powerhouses continue to offer flexibility and diversity, drawing in the most inexperienced of investors while maintaining a strong performance – currently boasting an impressive $US10 trillion in assets under management (AUM).

After record inflows in recent years, it is no surprise that it’s predicted that ETFs will hold over $US20 trillion by 2026, representing a compound annual growth rate of 17% over the next five years. This makes ETFs more popular than ever and this can also be attributed to their accessibility and the rise in digital investment platforms.

Satrix introduced the first ETF to South Africa in 2000, and investors have never looked back. ETFs have seen an increase in fund inflows in South Africa due to their resilience, making them an attractive option for investors looking to weather the pandemic storm and current tough economic times. Currently, ETFs have an AUM of R129 billion in South Africa.

A true revolutionary of the investing world, ETFs are arguably the single-most disruptive and game-changing product the market has ever seen.

Prior to the advent of ETFs, investing was expensive, could be confusing to beginners, and offered fewer options for portfolio diversification. ETFs changed all that, providing a basket of securities that trade on an exchange, like a stock, allowing investors to access a wide array of different exposures at minimal cost.

The introduction of ETFs has transformed the investing landscape, making investing accessible to everyone, and allowing individuals to make their money work harder for them at minimal expense. The market has transitioned from being predominantly composed of wealth managers buying shares, to a more diverse investment market accessible to all. The impact of ETFs has been seismic, and their significance in democratising investing, particularly in South Africa, and helping retail investors ‘own the market’ cannot be understated.

Major milestones for the world’s greatest financial innovation

Here is a timeline of ETFs’ greatest hits so far:

  1. The ETF is born:
    There were a few ‘prototype’ ETFs, from Wells Fargo’s efforts, to the Toronto 35 Index Participation units. Then, 30 years ago, in 1993, State Street Global Advisors launched the Standard & Poor’s Depositary Receipt (SPY), the first US-based Exchange Traded Fund (ETF), which tracked the S&P 500. It’s known as SPDR today, pronounced ‘Spider’. It’s still the largest ETF in the world, with over $370 billion in assets under management, consistently trading over 80 million shares daily. It was physicist-cum-submarine-specialist Nathan Most’s ‘baby’, and it took him about six years to launch.
  2. Dotcom changed everything:
    The Dotcom boom catapulted ETFs into public consciousness, thanks to the proliferation of the internet, which fueled S&P 500 growth of 28% a year, on average, between 1995 and 1999. This catalysed growing awareness of the power of indexing to ‘own the market’, versus stock picking.
  3. A big Millennium moment:
    In 2000, European ETFs launched for the first time, following approval from the Undertakings for Collective Investment in Transferable Securities (UCITS) directive from the European Union. In 2000, ETFs had $65 billion in assets. By 2010, this grew to $991 billion. 2000 also saw the first factor-based ETF come into existence in the US.
  4. Satrix brings ETFs to South Africa:
    Satrix pioneered its flagship Satrix 40 ETF, the first-ever South African ETF in November 2000, the same year the product launched in Europe. Kingsley Williams, our CIO, says, “We pioneered index tracking in South Africa to disrupt the status quo. Today, the power of investing belongs to everyone.”
  5. The Dotcom bust (2000-2002):
    The Dotcom bust showed many investors that trying to beat the market was incredibly difficult to do with any degree of consistency. A low-cost, well-diversified fund, with low turnover and tax advantages was an attractive option in a time of total upheaval, so ETF uptake grew considerably.
  6. Bonds arrive:
    Bond ETFs were launched in 2002, giving investors more opportunity to build diversified portfolios at low cost. It took close to 20 years for bond ETFs to surpass $1 trillion in global assets. BlackRock predicts they’ll hit $2 trillion by 2024. Commodity ETFs came shortly after bonds. All these different asset classes helped further democratise investing.
  7. Active ETFs arrive:
    2008 saw the first actively-managed ETFs launch, combining the traditional benefits of ETFs like low fees and tax efficiency, while capturing an active investment strategy. South Africa was only to see the Active ETF landscape materialise in 2023.
  8. ETFs ramp up in retail:
    ETFs started to gain traction in the retail market (non-professional) during the 2010s, driven by education and awareness, and people’s cost sensitivity and desire for transparency. They offered a plethora of interesting products at excellent price points. They also allowed astute investors to stay ahead of the curve, without having to wait for forward pricing for trust and mutual funds.
  9. The $1 trillion milestone is met:
    ETFs hit the trillion mark in assets under management in 2009.
  10. Sustainable ETFs take off:
    There’s been growing demand for sustainable and ESG-linked ETFs that allow investors to align their values with their investments. Satrix was the first to launch an ESG ETF in South Africa in 2019, with its Diversity and Inclusion ETF. Global ESG ETFs have had a 90% compound annual growth rate from 2015 to 2020. In 2020, ESG ETFs took approximately 10% of overall ETF flows globally. Sustainable assets are expected to double by 2025.
  11. No more minimums:
    In 2015, South Africa had another major ETF milestone when Satrix removed all minimums, making investing more accessible than ever before, with the launch of SatrixNOW.
  12. Invest more, offshore:
    ETFs also gained a lot of traction in South Africa because they allow for 100% offshore exposure, without people having to lose their foreign allowance capacity. Satrix’s partnership with iShares, for example, has been a major game changer for accessing foreign markets.
  13. Covid-19 caused major adoption:
    Counterintuitively, during the pandemic Satrix saw record investing inflows to ETFs. ‘Locked’ at home, many people had some disposable income available, and ETFs presented a safer option, in a time of serious distress. In 2019, the total AUM in the SA investment market was about R6 trillion, of which 5.3% was made up of indexed assets. This rose to R6.7 trillion (6.7%) by the end of 2021. Globally, the pattern was the same, with the pandemic pushing major money into index products, like those tied to the S&P 500.
  14. The first crypto ETF arrives:
    2021 saw the first ever Bitcoin ETF launch in the US.
  15. Passive surpasses active:
    In 2022, the AUM of equity indexed funds surpassed active funds in the US for the first time. Research shows global net inflows into indexed strategies have been far more consistent, relative to active funds, attracting 59% of new net flows from 2009 to 2019.

🎈 Happy 30th birthday to ETFs! 🎂
We’re proud to be a part of this industry that brought about an evolution in portfolio construction with greater choice, more features, reduced costs, and a consistently compelling performance. And their next chapter promises greater growth than ever before.

Disclosure
Satrix Investments (Pty) Ltd is an approved FSP in term of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. 

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Ghost Bites (African Media Entertainment | AYO Technology | Deneb Investments | eMedia | Frontier Transport Holdings | HCI | Lewis | Life Healthcare | MiX Telematics | Old Mutual | Premier Fishing | Reinet | Southern Sun | Stefanutti Stocks | Texton)

The Finance Ghost
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Ghost Bites (African Media Entertainment | AYO Technology | Deneb Investments | eMedia | Frontier Transport Holdings | HCI | Lewis | Life Healthcare | MiX Telematics | Old Mutual | Premier Fishing | Reinet | Southern Sun | Stefanutti Stocks | Texton)

African Media Entertainment rides a radio recovery (JSE: AME)

The trading statement is highly encouraging

Covid wasn’t great for the radio industry. That statement may not make sense at first blush, but the live events and music festivals held under the radio station banners are highly lucrative and nobody wanted to attend them as masked balls.

Things are better now, with African Media Entertainment guiding growth in HEPS for the year ended March of between 21% and 40%.

AYO Technology flags a large loss (JSE: AYO)

The headline loss per share has more than doubled

For the six months to February, AYO Technology has guided for a headline loss per share of between -75.63 cents and -82.49 cents. That’s huge when the share price is only R3.05! The headline loss per share in the comparable period was -35.90 cents.

The company has attributed this to lower gross margin, restructuring costs and fair value adjustments on options.

Finance costs hurt Deneb in this period (JSE: DNB)

And if you split out insurance proceeds, it’s worse

Deneb is part of the HCI stable and the company holds some interesting assets, though you would be forgiven for thinking otherwise based on the absolute lack of commentary on the underlying operations in the result.

Although revenue at Deneb managed to grow 14%, gross margin pressure meant that the increase in gross profit was unexciting.

With the usual inflationary pressures factored in alongside higher net finance costs, HEPS fell by 15%. If you exclude the business interruption proceeds insurance in this period, it fell by 45%!

eMedia: from Anaconda to Afrikaans Turkish telenovelas (JSE: EMH)

Diversification has helped at a time when advertising revenue is dropping

eMedia owns not just e.tv, but also other assets like YFM (the radio station) and local film studios. This diversification has been helpful in a period of extended load shedding, with the company believing that Eskom has cost the TV advertising industry a whopping R500 million in revenue.

I think it’s pretty good that group revenue only fell by 0.6% in this environment, with profit down by 10.3%. The market clearly didn’t see it coming, with the share price dropping 9.7% on the day. A 20% drop in the dividend (and hence a lower payout ratio) may have been a driver here.

I found myself thoroughly intrigued by a note that Afrikaans Turkish telenovelas have been a major audience generator in the eVOD platform. This is the local version of a Netflix Originals strategy!

To give context to the results, group profit was R377 million and within that number, we find smaller subsidiaries like Media Film Services with net profit of R45 million and YFM on R15.9 million.

Frontier Transport Holdings – are you on the bus? (JSE: FTH)

You may not even be aware that these businesses are listed

Frontier Transport Holdings is one of those companies that only a close market watcher will likely know about. Part of the Hosken Consolidated Investments (JSE: HCI) stable, it includes businesses like Golden Arrow Bus Services.

For the year ended March, revenue increased by 15.1% but operating expenses increased by 18.9% over the same period. This margin pressure was driven by issues like fuel costs, with EBITDA only 2% higher as a result.

Thanks to a reduction in debt and thus finance costs, HEPS was up 5.9%. The full year dividend of 57 cents is a 9.6% increase on the prior year.

HCI’s solid result is underpinned by gaming and hotels (JSE: HCI)

A helpful contribution from coal doesn’t hurt, either

Hosken Consolidated Investments (HCI) is a fascinating group. It’s always a busy time on SENS when the company reports, as the reporting cycle is the same as the other listed companies that are part of the HCI group, like eMedia, Deneb and Frontier Transport Holdings. Those have all been covered separately today.

The easiest way to get a quick sense of the group is to use this table directly from the earnings release for the year ended March 2023:

The headings are cut off, but the latest period is on the left. You can immediately see the improvement in gaming and hotels, with coal also a lot higher. Note the pressure in media and broadcasting, particularly the television assets that don’t perform well during load shedding.

Your eyes aren’t deceiving you. In the bottom right, that is indeed a 55% jump in headline earnings.

With an investment focus on oil and gas prospects in Namibia, the group decided not to declare a final dividend. Watch this space.

Lewis feels the bite of economic pressure in SA (JSE: LEW)

Thanks to the ongoing share buybacks, HEPS managed to inch higher

Furniture retail group Lewis is well known among investors for a share buyback approach that has produced far better results for shareholders than would otherwise have been the case. Lewis trades at stubbornly low multiples, so share buybacks tend to be lucrative.

Share buybacks only get you so far, though. Lewis is facing considerable pressure in its operations, driven by broader challenges in South Africa.

Perhaps the biggest concern is that cash sales are moving sharply in the wrong direction. Cash retailer UFO suffered a sales drop of 12.5%. Group credit sales grew by 18.1% while cash sales fell by 16.3%. Ouch. It does at least help that the quality of the book has improved year-on-year, with the impairment provision improving from 40.4% of the book to 36.2%.

Total group revenue increased by 3.1% and gross margin improved by 10 basis points to 40.6%. Lower shipping rates have been helpful here. Despite this, operating profit fell by 8.3% as inflationary pressures in the cost base were too much to bear.

Here’s where the magic of share buybacks comes in: although headline earnings fell by 9.8%, headline earnings per share (HEPS) was actually up by 1%!

Life’s core business is performing strongly (JSE: LHC)

A VAT dispute settlement overshadowed the latest results

For the six months ended March 2023, Life Healthcare grew revenue by 12.9% and normalised EBITDA by 13.9%. That sounds great, until you read about normalised earnings per share only increasing by 1.1%. You can largely thank the tax dispute with SARS for that, with Life having paid R246 million in VAT of which R199 million was provided for in the prior period. This was despite Life having “strong legal and tax opinions” on this.

Something we aren’t reading about very often at the moment is margin expansion in Southern Africa, yet Life has managed to enjoy the right side of operating leverage in the land of load shedding. Revenue was up 11.6% and normalised EBITDA increased by 13.5%. In the AMG business in Europe and the UK, revenue grew by 15.5% and normalised EBITDA by 10.8%.

Net debt to EBITDA at 2.17x is higher than the comparable period at 2.03x, but remains manageable.

Strategic focus areas at the company include further investment in molecular imaging in South Africa and renal dialysis clinics, also in the local market. The hospitals have always had to be able to function with emergency electricity, so this is one of the few industries where capital expenditure is still going into the core business rather than into power backup solutions. Capex in Southern Africa was R514 million in this period, of which R418 million was on refurbishment and “portfolio optimisation” – classic boardroom terminology.

Despite the decent core results and a 13.3% increase in the dividend per share, the share price closed 7% lower.

Importantly, Life is still in discussions with various parties regarding unsolicited offers received for the AMG business in Europe.

Margins under pressure at MiX Telematics (JSE: MIX)

The impact on HEPS from a tax charge was severe

In the year ended March 2023, MiX Telematics managed to grow revenue by 15.7% or 10.3% on a constant currency basis. The acquisition of FSM was a positive contributor here, responsible for 4.5% of the 11.9% constant currency growth in the subscription revenue line specifically.

Margins went the wrong way though, with gross margin down 110 basis points and operating margin down 190 basis points. The additional pressure in operating margins was due to restructuring costs, the benefits of which should start coming through.

Because of a massive deferred tax charge on intercompany loans, HEPS fell by 46%. On an adjusted basis excluding restructuring costs and the deferred tax charge, it was slightly up year-on-year.

Old Mutual was a mixed bag this quarter (JSE: OMU)

A group this size usually has winners and losers in any given period

In an update for the three months to March, Old Mutual reported a 1% drop in Life APE sales mainly because of China, without which the sales number would’ve been 7% higher. Persistency is under pressure, which means that Old Mutual’s clients aren’t necessarily hanging on to life policies.

Gross flows increased by 22%, with Futuregrowth as a strong contributor here. Unfortunately, outflows in wealth management across all platforms was a partial mitigator of that good news story around flows.

Loans and advances were flat year-on-year, which tells me that Old Mutual is being cautious in this environment.

On the insurance side, gross written premiums increased by 19%.

Squid games at Premier Fishing and Brands (JSE: PFB)

There’s a tasty jump in operating profits at the company – but no dividend

For the six months to February, Premier Fishing and Brands reported a 15% jump in revenue, with the squid sector as the major driver of the strong jump in revenue. Lobster and hake deep sea also did well.

The problem is that shareholders of Premier didn’t get the lion’s share here, with a large part of profits attributable to minorities. This led to a drop in HEPS of 61.6%.

There’s also trouble on the balance sheet, with profits not flowing through into cash in the way that the company would’ve liked. There is no interim dividend.

Reinet flags a 2.9% drop in NAV year-on-year (JSE: RNI)

The compound growth rate since 2009 is 8.8% in euros

The drop in NAV at Reinet over the past year is mostly attributable to the stake in British American Tobacco (JSE: BTI), a company which I don’t believe is as defensive as the market likes to think it is.

The private equity investments had a good year, up by 26%. Although everyone only ever talks about the stakes in British American Tobacco and Pension Corporation, Reinet actively reinvests dividends in new opportunities that can be quite exciting, like technology funds.

The proposed dividend of €0.30 per share is 7% higher than the comparable period.

Southern Sun’s profits beat FY20 (JSE: SSU)

This is despite a lower occupancy rate than pre-pandemic

There are two ways to think about the occupancy rate. If you’re bearish, you might argue that a full recovery in occupancy isn’t coming for a long time, with a structural decrease in business travel and economic pressures on leisure travel. If you’re bullish, you could argue that there is runway for further improvement in this story.

Or, you could simply read the Southern Sun announcement, in which case you’ll see commentary around a normalisation of travel patterns except for the Sandton node. Structurally lower activity in Sandton has been a theme of the post-pandemic world, with devastating effects on office property owners in the area.

Welcome to the markets, where people can look at the same piece of information and form completely different views.

The year-on-year performance is a little silly, with EBITDAR (that’s not a typo – it’s the standard measure in hotel groups for operating profit) more than doubling from R590 million to R1.4 billion. The more interesting approach is to compare it to FY20 (where only one month was impacted by Covid), in which case EBITDAR is 6.2% higher despite occupancy of 51.5% vs. 59.3% in FY20.

In a great demonstration of how sensitive profitability is to occupancy above the point where fixed costs are covered, occupancy was only 30.6% in FY22. So, occupancy increased by roughly 68% (51.5% vs. 30.6%) and profits increased by approximately 140%. Welcome to hotel economics.

Winter is coming. The group notes the uncertainty around demand over this period, particularly with load shedding. The good news is that the balance sheet is in good shape to weather this storm.

The share price has made a full recovery vs. pre-Covid levels but seems to have run out of steam in 2023:

Stefanutti Stocks: under construction (JSE: SSK)

Valuation is everything – as evidenced by this share price move

The markets can be confusing. A company can release seemingly solid results and watch its share price drop. Stefanutti Stocks can release a headline loss per share of -38.73 cents for the year ended February 2023 and watch its share price close 9.6% higher.

It all comes down to what the market was pricing in. When it comes to Stefanutti Stocks and its broken business that is being restructured, this bruised and battered fighter isn’t exactly priced for great expectations.

The restructuring plan is being implemented over the year ended February 2024. It includes everything from the sale of non-core assets through to a potential equity capital raise.

This is a perfect example of a speculative punt on a turnaround story. With an operating profit from continuing operations of over R100 million but a total loss from continuing operations of -R37.5 million, there is something to save here underneath layers of difficulty.

Texton looks to take the PIC out at a good price (JSE: TEX)

A large specific repurchase is on the cards

Texton is proposing a repurchase of approximately 19.8% of its share capital from the PIC at a price of R2.15 per share, a substantial discount to the current traded price of R2.41. That may sound strange, but there’s absolutely no chance the PIC could sell a stake that size on the open market without smashing the price into oblivion.

Here’s the funny part: the repurchase will come out of existing cash resources, but Texton may then require a rights offer for its strategy. At what price does the management team think a rights offer can be achieved?!?

Assuming a rights offer goes ahead, is there really a saving here for shareholders net of transaction costs on the buyback and the rights offer?

Little Bites:

  • Tsogo Sun Gaming (JSE: TSG) has built a 10% stake in City Lodge (JSE: CLH) very quickly, which obviously has gotten the market talking about potential takeout activity. The City Lodge announcement doesn’t specifically mention Tsogo Sun Gaming, but the companies that own the 10% stake were figured out by financial media houses to be part of the Tsogo Sun Gaming group.
  • With the scheme of arrangement for the take-private of Mediclinic (JSE: MEI) sanctioned by the UK court, the listing on the JSE will be terminated on 7 June.
  • It won’t make much of a dent, but every bit helps – Nampak (JSE: NPK) has sold a property in Tanzania for $5.5 million, payable over four instalments until August.
  • Capital & Regional Plc (JSE: CRP) will issue shares equivalent to 2.6% of share capital under the scrip dividend.
  • The CFO of Telemasters (JSE: TLM) has retired (for the second time!) with the company in the process of finding a replacement.

Ghost Stories #14: Altvest – misplaced or misunderstood? (with Warren Wheatley)

The Finance Ghost
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Ghost Stories #14: Altvest – misplaced or misunderstood? (with Warren Wheatley)

Altvest has garnered a lot of attention in a short space of time. This financial services group is building in public, which is a very difficult thing to do as start-up losses are scrutinised by the market and pivots are a matter of public discussion rather than private decisions in a boardroom.

With a controversial approach at times to its public persona, much of the Altvest story has been lost in the noise.

Warren Wheatley approached me for a fireside chat to dig into the vision at Altvest and to address some of the historical matters on social media.

This is a raw, unedited discussion that lasted just over an hour. If you want to understand a lot more about the Altvest business and the challenges of building in public, then this is for you.

Note:

An appearance on the Ghost Stories podcast is never an endorsement by me of a company’s investment case, business model or share price. Always do your own research and arrive at your own decision. At the time of the release of this podcast, I do not currently own shares in Altvest or any related entity.

DealMakers AFRICA – Analysis Q1 2023

Marylou Greig
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DealMakers AFRICA – Analysis Q1 2023

The total value of deals captured (excluding South Africa) for Q1 2023 was US$3,63 billion, almost a third of the value of that reported for the same period in 2022. Of the 123 deals captured, 38% of activity was recorded in East Africa – specifically, in Kenya – followed by West Africa, led by Nigeria with 28% of the Q1 M&A activity.

The increasing importance of private equity (PE) investment on the continent has been highlighted for some time, and the decrease in M&A activity for the first quarter of 2023 is directly aligned with the fall off in PE investment for the period. There were 74 PE deals captured for Q1 2023, with a reportable value of $562,6 million (reportable because the value of many of these deals is undisclosed), constituting 60% of all M&A activity for the quarter. This is compared with $1,34 billion (139 deals) over the same period, a year ago. According to Africa: The Big Deal, the amount raised by start-ups in the first four months of 2023 is less than half of what it was at the same time back in 2022, with healthcare being the only sector recording positive year-on-year growth, contrasting with the steep decline almost everywhere else. If the continent’s economies are to return to the unprecedented growth seen in the two decades leading up to COVID, then focus should be on ensuring that start-ups have the support and conditions needed to help fuel the next wave of growth. Africa, with 60% of its population under the age of 25, is ripe to embrace new technologies, particularly if they address the socio-economic problems faced.

The largest deal by value was the acquisition by China Natural Resources (CNR) of the Williams Minerals lithium mine in Zimbabwe for US$1,75 billion from Chinese investment company Feishang Group and Top Pacific (China). The deal is a strategic move by CNR to meet the rising demand for a safe and reliable resource of lithium in a global market where the appetite for renewable energy continues to grow. Unsurprisingly, with the world focused on goals to reduce carbon emissions toward a clean energy future, five of the top six deals by value for the quarter fall into the Energy/Resources sector.

The latest magazine can be accessed as a free-to-read publication at www.dealmakersdigital.co.za

DealMakers AFRICA is Africa’s corporate finance magazine.
www.dealmakersafrica.com

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?

Exchange-Listed Companies

Life Healthcare is to acquire the renal dialysis clinics in southern Africa belonging to German dialysis specialist Fresenius Medical Care. The 51 clinics located in Namibia, Eswatini and South Africa will become part of Life Healthcare’s renal care programme.

With the liquidation of Conduit Capital’s largest insurance business, Constantia Insurance Company, the Group does not have the scale and capital to grow its remaining insurance businesses. For this reason, Conduit Capital is to dispose of Constantia Risk and Insurance to TMM for an aggregate cash price of R55 million. Part of the disposal payment will be kept in escrow to cover sales claims against Constantia Life should they arise.

The offer by Community Holdings to Jasco Electronics’ minority shareholders has been accepted in respect of 70,097,576 Jasco shares representing 19.08% of the total shares in issue, increasing the equity stake to 74.42%. The shares were acquired for a consideration of 16 cents per Jasco ordinary share, representing a 4% premium on the 30-day weighted average traded price of Jasco shares on 2 December 2022, the trading day preceding announcement. The delisting of Jasco was terminated this week on 23 May 2023.

Nampak has disposed of the property in Dar es Salaam which housed its Tanzanian manufacturing business prior to being wound down and closed. The property was sold to Canda (T) Investment Company for US$5,55 million.

Unlisted Companies

Edtech startup Play Sense, has secured an undisclosed funding from Grindstone Ventures. The preschool offers play-based learning through its micro-schools online platform. The funds will be used to enhance its franchise model and accelerate growth.

TSX-listed Dye & Durham, one of the world’s largest providers of cloud-based legal practice management software, has acquired Cape Town-headquartered GhostPractice in a deal in which the financial terms were undisclosed. GhostPractice is the largest provider of legal practice management software in South Africa and also serves law firms in Canada.

DealMakers is SA’s 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

Texton Property Fund is to repurchase 72,129,048 shares from the Government Employees Pension Fund at a repurchase price of R2.15 per share. The repurchase represents 19.8% of the total issued share capital of the company. The shares will be cancelled with the aggregate number of Texton shares in issue reducing to 291,572,055. A total of 31,852,013 shares will be held as treasury shares.

Orion Minerals has issued 115,35 million shares at an issue price of $0.015 (R0,18) to investors as part of its capital raising exercise and a further 51,5 million shares to Tembo Capital as repayment of the convertible loan. Funds from the two-tranche placement to raise $13 million will be used to accelerate the development of both of its key base metal production hubs in the Northern Cape.

In the release of its interim results, Nampak told shareholders that the requirement for a minimum Rights Offer of R1,5 billion has been reduced to a Rights Offer of up to R1,0 billion. On going negotiations to conclude credit-approved term sheets for the refinancing package for the next five years together with the implementation of the restructuring plan will determine the size of the required rights offer, which will be announced to shareholders in due course.

Universal Partners has issued 108,036 new shares to Argo Investments Managers as part settlement of the carry fee owned to Argo in relation to the disposal of the company’s investment in YASA.

PPC has taken a secondary listing on A2X with effect from 30 May 2023. The company will retain its listings on the JSE and the Zimbabwean Stock Exchange. The listing will bring the number of instruments listed on A2X to 129 with a combined market capitalisation of over R9 million.

A number of companies listed on one of South Africa’s Stock Exchanges have initiated share buyback programmes and each week update shareholders. They are:

Lesaka Technologies has repurchased c. 250,000 common shares in the company at a price of $3.26 (R62.08).

South32 has increased its share repurchase programme by c. $50 million in anticipation of a stronger outlook for commodity prices in the second half of its financial year. This will enable the company to return $158 million to shareholders before September 2023. This week the company repurchased a further 1,957,023 shares at an aggregate cost of A$7,90 million.

Glencore this week repurchased 14,880,000 shares for a total consideration of £64,20 million. The share repurchases form part of the second phase of the company’s existing buy-back programme.

Prosus and Naspers continued with their open-ended share repurchase programmes. During the period 15 to 19 May 2023, a further 2,696,979 Prosus shares were repurchased for an aggregate €183,62 million and a further 571,127 Naspers shares for a total consideration of R1,91 billion.

Five companies issued profit warnings this week: Nampak, MiX Telematics, Delta Property Fund, Premier Fishing and Brands and Ayo Technology Solutions.

Six companies issued or withdrew a cautionary notice: Ayo Technology Solutions, Conduit Capital, Tongaat Hulett, Primeserv, Finbond and Texton Property Fund.

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

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

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

DealMakers AFRICA

Abler Nordic, a public-private partnership investing in companies in Africa and Asia, has announced a successful exit from its decade-long investment in Baobab Senegal. Baobab is a financial services group with operations in seven countries across the continent and a presence in one province in China, servicing half a million micro entrepreneurs and small businesses.

Corcel Plc, the AIM-listed extractive industries exploration and development company, is to acquire a 90% stake in Atlas Petroleum Exploration Worldwide (APEX). APEX has working interests in several historically producing oil assets in the Kwanza Basin, onshore Angola. The £800,000 deal is the company’s first oil and gas acquisition and will be settled by the issuance of 200 million new ordinary shares.

Creditinfo Group, a service provider of credit information and risk management solutions, is to acquire two credit bureaus in Uganda and Namibia.

Dawi Clinics, a large chain of outpatient care in Egypt, has raised EGP 250 million in an investment round led by Al Ahly Capital Holdings (ACH), the local investment arm of the National Bank of Egypt. The Egyptian-American Enterprise Fund co-invested alongside ACH. The investment will be used to fund the growth of its chain of clinics across Egypt by opening 30 new branches.

Sadot, a subsidiary of Muscle Maker Inc, a global agricultural-commodity supply chain and emerging growth stage restaurant company, has announced the purchase of 2,000 hectares of agricultural land located within the Mkushi Farm Block of Zambia’s Region II agricultural zone. The land, along with buildings and related assets was acquired for US$8,5 million. Initially wheat, soy and corn will be grown and sold to local African markets with the goal to integrate into Sadot’s international trade, launching a new business vertical in the food supply chain strategy.

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

Takeovers: Don’t shout it from the rooftops, please

Brian Jennings and Keagan Hyslop
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Takeovers: Don’t shout it from the rooftops, please

The takeover of companies is a highly regulated process. This article focuses only on oversight over disclosures made by potential offerors or targets.

In the UK, the Takeover Codes allow for two types of disclosures to be made prior to a formal offer, namely voluntary possible offer announcements and mandatory possible offer announcements. A mandatory possible offer announcement is required when, inter alia, a company “is the subject of rumour and speculation or there is an untoward movement in its share price”. Few details are provided as the announcement is aimed at subduing speculation. On the other hand, a voluntary possible offer announcement allows an offeror or a target to test the waters of the market through a public announcement that a potential takeover may be on the cards. The Takeover Codes require this announcement to identify the potential offeror and state the “put up or shut up” deadline (the date by which the potential offeror must either make an offer or announce that it no longer intends to make an offer).

The UK’s Takeover Codes, therefore, allow a potential offeror to voluntarily announce a potential takeover before making a firm offer. However, does South African law allow the same? In a recent ruling, the Takeover Special Committee (Committee) discussed public statements made before a firm offer in South Africa. Caxton & CTP Publishers and Printers Limited (Caxton) made certain public statements as to its intent to acquire control of Mpact Limited (Mpact), an acquisition that would be subject to the Takeover Regulations. Unhappy with these public statements, Mpact approached the Takeover Regulation Panel (TRP) and the TRP prohibited Caxton from making any further public statements about the acquisition in any form without the prior approval of the TRP under Regulation 117 of the Takeover Regulations. Caxton appealed to the Committee, claiming that Regulation 117 does not apply to an announcement of an objective to acquire securities in a manner that might constitute an affected transaction. It argued that there was not “even a proposed deal on the table” as it had made no offer, nor proposed a purchase price, and its statements clearly indicated that any offer was dependent on competition approval. According to Caxton, Regulation 117 only applies to documents that relate to the offer to acquire shares or the acquisition itself.

The Committee began by setting out the two stages of an affected transaction regulated by the Takeover Regulations – the pre-firm offer stage and the post-firm offer stage. The following principles arising from Regulations 95, 99 and 100 apply to the pre-firm offer stage –
(i) an approach may only be made to the target’s board;

(ii) all pre-firm offer negotiations are confidential and leaks of price sensitive information must immediately be disclosed in a cautionary statement (a statement that urges security holders and the marketplace to exercise caution when trading the securities of the target);

(iii) confidentiality may only be broken to make a cautionary statement or a firm intention announcement, both of which fall within the oversight of the Takeover Regulations; and

(iv) the target’s board is the gatekeeper that must satisfy itself that the potential offeror is ready, willing and able to commit to the offer.

On the other hand, post-firm offers are governed by Regulations 117 and 111(8). Regulation 111(8) also applies to any statement that, while not necessarily factually inaccurate, may create uncertainty or mislead security holders. Clearly, no communication falls beyond the reach of the Takeover Regulations where it either signals an approach with a view of an offer being made (a pre-firm offer communication) or where it is made following an announced firm offer (a post-firm offer communication).

The Committee held as such:
(1) Caxton’s statements, although undeveloped, conveyed a clear and unambiguous declaration of its intent to eventually acquire control of Mpact through an affected transaction.

(2) It was also made in the context of a collapsed negotiation with Mpact’s board after it refused to co-operate with Caxton to file a joint merger notification. Caxton had failed to convince Mpact’s board, the gatekeeper to the transaction, that it was ready, willing, and able to implement a proposed offer.

(3) Therefore, its impugned announcement to the market, which subjected Mpact to speculation without a firm offer on the table, conflicted with the principles and spirit of the Takeover Regulations.

(4) The prohibition on Caxton should not have been sourced in Regulation 117, which applies to cautionary announcements that are made during the pre-firm offer stage, but rather regulations 99(1), read with regulation 95 and 100, in that it did not respect the role of the board as the gatekeeper, it did not maintain confidentiality, and it did not disclose the leak of price sensitive information as a cautionary statement.

(5) Regulation 117 does not apply to verbal statements, but Regulations 99(1), 95 and 100 apply to both oral and written statements during both the pre-firm offer and the post-firm offer stages.

Therefore, in South Africa, until we have direction otherwise, there appears to be no space for possible offer statements. Any announcements in the pre-firm offer stage would only be permitted in the form of a cautionary statement following a leak of price-sensitive information. Silence is golden then, it seems.

Brian Jennings is a Director and Keagan Hyslop a Candidate Attorney in the Corporate & Commercial practice | Cliffe Dekker Hofmeyr.

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

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

The resilient rise of African Fintech

Ashlin Perumall
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The resilient rise of African Fintech

Despite global economic challenges, the African fintech ecosystem continues to expand, with startup fintech investments proving a dominant source of venture capital deals. In 2022, over 100 startups in Africa obtained first-time funding above US$1 million, with fintech proving a strong source of investment. This reflects a steady course for growth in African fintech, with the industry making up more than 25% of all venture capital rounds in the last few years.

In such investment rounds, South Africa is joining other regional leaders, like Egypt, Nigeria and Kenya. Nigeria and Kenya have been two of the African fintech hotbeds garnering the most attention. Kenya’s fintech explosion occurred largely because the general African fintech wave followed the penetration of mobile phone technology and infrastructure. Kenya’s current mobile penetration surpasses the country’s entire population by 12%. Kenya’s fintech industry was originally focused on mobile money transfer services, and rode the wave of exponential market adoption between 2007 and today. Building on technology akin to GSM text messaging, major players in the market were able to expand their offering to users who did not have internet or data connections, but had access to cellular phone towers and basic mobile devices. In that same period, financial inclusion went from 26% in 2006 to 83% of the total population today. That activity created a market that many other fintech entrants were able to diversify within and, as a result, a large portion of GDP flowed through such services. This makes the regulators similarly fintech-friendly and creates interest in being cooperative towards innovation.

Nigeria’s rise has been similar, although perhaps more rapid in the last few years. Three of the largest African unicorns come from Nigeria, and the country is dominant in Africa in respect of fintech venture capital investments. This has followed some of the same drivers as Kenya on mobile penetration, but has also benefitted from a highly entrepreneurial technology sector and deep issues in respect of financial inclusion. About 38 million adults in Nigeria are completely financially excluded, particularly when it comes to credit access. This created the perfect conditions for dynamic fintechs to emerge, with a massive potential market if successful.

Out of the nine notable tech unicorns in Africa, seven are fintech companies. In terms of scaled fintech, mobile money, and third-party payment systems in particular, are segment leaders in the African fintech space, with more than half of the world’s mobile money customers now based in Africa. Many experts predict Mobile Network Operators (MNOs) will refine their fintech strategies in 2023 and 2024, taking more space out of the traditional banking industry, particularly as they begin to obtain mobile money licenses in new territories.

Nonetheless, the traditional banking industry has also seen some notable projects. In South Africa, for instance, the recent launch of the rapid payments system branded as ‘PayShap’ has been a particularly noteworthy development.

PayShap is the outcome of an industry-spanning collaboration, driven by BankservAfrica, the Payments Association of South Africa and the South African banking community, with the aim of modernising the national payments industry in the country. This development signals a progressive approach by local policymakers, together with the industry, and will hopefully lead to more dynamism in the sector and wider access to the country’s fintech products and investment opportunities, whilst keeping in step with the growing demands of international standards. It is also, however, a potential disruptor in the fintech sector, where some successful fintech ventures have built their payment products in the gaps of the traditional banking digital payments infrastructure. It remains to be seen whether the introduction of PayShap will influence any consolidation of players in an already saturated payments industry, and how this development may reshape or enhance African payments business models going forward.

Stagflation and the drying up of speculative capital remain some of the biggest challenges facing fintech globally, as investors are going to be more careful in their investment choices and selective in their risk-taking. Early venture figures in the first quarter of 2023 showed broader venture investment dropping to close to pre-pandemic levels, and this will have an impact on the types of fintech ventures that are able to survive. However, the African fintech space has shown incredible resilience to global market turmoil and there is still a lot more room for growth in segments such as alternative lending, digital investment and neobanking. African economies are buoyed by young populations that are increasingly entrepreneurial and driven by technology-led innovation. Digital infrastructure is also attracting investor interest; for example, there is an imbalance in the supply of data centres, compared to the growth expected from consumers that need more data and are spending more time online. There are also many other African countries that haven’t yet reached the heights achieved by the likes of Nigeria, Kenya, South Africa and others in their fintech development. The resilient rise of fintech in Africa appears to be far from over.

Ashlin Perumall is a Partner in Baker McKenzie’s Corporate/M&A Practice in Johannesburg

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

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