Monday, July 14, 2025
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GHOST BITES (ASP Isotopes | Delta Property Fund | Finbond | Impala Platinum | Merafe – Glencore | Renergen | YeboYethu)

The Finance Ghost
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GHOST BITES (ASP Isotopes | Delta Property Fund | Finbond | Impala Platinum | Merafe – Glencore | Renergen | YeboYethu)

ASP Isotopes – a new tech listing is coming

News of a fresh listing is always exciting

Here’s something you won’t see every day in the local market: a new listing! It’s not even a spin-off of something that is already in a listed group, as we saw with the likes of Boxer and WeBuyCars. No, this is something brand new to our market.

ASP Isotopes has been listed on the Nasdaq since 2022 and has a market cap of $400 million. That’s small by US standards, but would make it a decently-sized mid-cap on the JSE.

So, why the JSE? Simply, because 97% of the employees and operating assets are right here in South Africa. This clearly gives the company the ability to use local shares for incentivisation as well as for any potential deals.

Here’s a rather astonishing statistic: 19% of the staff at the company hold PhDs. Talk about a daunting place for a water cooler chat! All these clever people are focused on producing and enriching natural isotopes at three production facilities in Pretoria. They use processes that you can reference at the dinner table to sound impressive, like Aerodynamic Separation Process (hence the name ASP Isotopes I presume) and Quantum Enrichment. Then you have to hope that nobody asks you for further details.

The client base for these products can be found in the medical, semiconductor and nuclear energy markets. With Russia currently producing 85% of stable isotopes in the world, I can already see why this company is in such a juicy geopolitical position at the moment.

Subject to approvals, the listing is expected to take place on the Main Board of the JSE later this year. Exciting!

Delta Property Fund announces another disposal (JSE: DLT)

Slowly but surely, they are making progress

The old joke about eating an elephant one bite at a time is certainly applicable to the debt on the Delta Property Fund balance sheet. They continue to dispose of properties as often as possible, with the intention being to reduce debt. Sadly, these aren’t exactly premium properties, so getting them sold isn’t so easy.

The latest sale is the Chambers of Change building in the Johannesburg CBD. The purchaser is not a related party and the price that they got is R25 million, which is well below the valuation as at the end of February 2024 of R37.7 million. To be fair, with a vacancy rate of 76.2% in this office building, the “value” is a relative term.

The purchaser is paying a non-refundable deposit of R1.25 million and has to come up with the remaining R23.75 million within 45 business days.

Finbond wants to tap the market for capital (JSE: FGL)

Preference shares are the preferred mechanism

Finbond has issued a circular to shareholders that proposes the creation of 1,000,000,000 unlisted preference shares. They are looking to raise capital for “operating capital” – and they aren’t messing around, with a proposed maximum raise of R2 billion.

Although Finbond claims that this is non-dilutive for ordinary shareholders, this really is a sugar-coated view. Sure, issuing preference shares won’t dilute voting rights, but the word “preference” is there for a reason. These shares rank ahead of ordinary shares for things like dividends, or in a liquidation situation.

Finbond’s market cap is just R370 million, so the quantum of the raise is also relevant here. If they get the full raise away (or even a meaningful portion of it), such an issuance would dwarf the existing ordinary equity value.

If you’re a shareholder, I suggest that you very carefully consider this circular.

Implats maintains guidance despite a tough quarter (JSE: IMP)

Production was under pressure, but sales were slightly up

In a production update dealing with the quarter and nine months ended March, Implats noted that they faced production challenges that included maintenance in the South African operations. Despite this, full-year guidance for volumes and unit costs has been maintained, so that’s a decent outcome.

For the nine months, 6E refined and saleable production was up 1% to 2.5 million ounces and 6E sales volumes also increased 1% to 2.55 million ounces. They therefore dug into finished stock in this period, as they sold slightly more than they produced. Notably, although refined and saleable production was slightly higher, group production volumes actually fell by 5%.

Another important point to note is that the momentum in the third quarter was concerning, with sales volumes down 6%. Refined and saleable production was flat for the quarter. If that carries on into the fourth quarter, it will further impact the full-year numbers.

Merafe and Glencore are pulling back on ferrochrome production (JSE: MRF | JSE GLN)

This is far more important to Merafe than it is to Glencore

Glencore operates a vast group across numerous commodities, so a few ferrochrome smelters in South Africa won’t exactly move the dial for them. As for Merafe though, these assets represent their entire business. This is why you’ll find an announcement by Merafe and not by Glencore regarding the decision to suspend operations at two smelters.

The ferrochrome market just isn’t playing nicely at the moment, with Merafe having responded to these issues by initiating a business review process. The outcome of this process is that the Boshoek and Wonderkop smelters will be suspended during May 2025. There is no intended date for lifting of the suspension, unless ferrochrome prices improve.

The Lion smelter will continue with production for the remainder of 2025.

Merafe is one of those stocks that has always been trading on a “cheap” P/E multiple. Cheap is often cheap for a reason, particularly in mining houses with exposure to a single commodity.

Losses widen at Renergen (JSE: REN)

At this stage in the company’s journey, losses are to be expected

Renergen is still in its relative infancy when you consider how much development work still needs to happen to bring the helium dreams to life. Even without the many bumps in the road that we’ve seen in the past couple of years, it’s likely that the company would still be loss-making at the moment.

Those who are bullish on the company are focused on the long-term prospects, not the near-term earnings. Still, it’s never nice to see that the headline loss per share has more than doubled.

The expected range in the trading statement is -R1.52 to -R1.67 per share for the year ended February 2025. The comparable period was -R0.7507 per share.

The Vodacom share price boosted YeboYethu (JSE: YYLBEE)

The earnings in the structure are as volatile as the share price

B-BBEE investment structures like YeboYethu have only one investment, so their earnings (and thus value) are volatile based on how that underlying investment moves. In the case of YeboYethu, the underlying investment is Vodacom.

This volatility comes through clearly in the trading statement for the year ended March 2025, in which YeboYethu expects HEPS to be between R40 and R48, which is a wild swing from a loss of -R40.04 in the comparable period!

The net asset value (NAV) per share has also increased dramatically, up from R31.51 to between R71 and R77.

This has been driven by a 27% increase in the Vodacom share price between March 2024 and March 2025. The reason why this percentage change causes a much larger percentage change in the value of YeboYethu is because of leverage (debt) in the structure. In good times, leverage is your friend. In bad times, it can kill you.

Nibbles:

  • Director dealings:
    • A director of Italtile (JSE: ITE) sold pledged shares in on-market trades to the value of over R1.5 million.
    • It was a smaller trade than usual for Des de Beer this time, with a purchase of Lighthouse Properties (JSE: LTE) shares worth R53k.
  • Caxton and CTP Publishers and Printers (JSE: CAT) is proposing an odd lot offer. We regularly see this on the local market, as companies with a long tail of retail shareholders carry a significant cost of compliance and administration for the sake of a small percentage of the overall economics of the company. At Caxton, shareholders with fewer than 100 shares represent 32.3% of total shareholders, yet hold just 0.27% of share capital in aggregate. Credit to Caxton – they are at least executing the odd lot offer at a decent price, being a 20% premium to the 30-day VWAP calculated up to 23rd May. Note that this is being structured as a dividend, so dividend withholding tax of 20% would apply to individual shareholders. Still, I’ve seen a number of companies structure this as a dividend without paying a premium, so this is a much fairer approach to shareholders.
  • As a reminder that the mining industry is still a dangerous place for workers, Harmony Gold (JSE: HAR) announced a loss of life incident at Moab Khotsong mine. This happened in a locomotive-related accident. It’s always very sad to read these updates.
  • Trustco (JSE: TTO) is still working towards a delisting of the company and has renewed the cautionary announcement in this regard.

The IVF pioneer that the world (almost) forgot

Dominique Olivier
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The IVF pioneer that the world (almost) forgot

Science doesn’t just progress in laboratories. It unfolds in the margins, shaped by the people, politics, and institutions around it. The story of IVF, when told in full, reminds us that breakthroughs are often born twice: once in the petri dish, and again in the public imagination.

Look, I’m sure your mom and dad were really pleased when you were born, but let’s be honest: not everyone’s birth is lauded as one of the most important medical breakthroughs of the 20th century. That distinct honour went to one Louise Joy Brown in 1978, when she became the first human being in history to be born following conception by in vitro fertilisation.

Louise was the first in her family (in the world), and just four years later, the birth of her sister Natalie marked the 40th IVF baby. And when Natalie went on to have her own baby (conceived without IVF) in 1999, she became the first human conceived by IVF to give birth, proving that IVF babies could grow up to be perfectly “normal” reproductive adults (much to the relief of a watching world). That’s a whole lot of firsts for the Brown family!

Fast forward to today, and more than 10 million IVF babies have been born around the world. Estimates suggest that between 1% and 6% of all babies born since 2020 have arrived courtesy of a petri dish. 

But there’s a side to this story that most people don’t know. Just 67 days after Louise Brown’s birth, another IVF baby was born – this time in India. Her name is Kanupriya Agarwal, and the man who made her birth possible, Dr. Subhash Mukherjee, used a method entirely different from Edwards’ team, working with far fewer resources and in near-total isolation.

So why wasn’t his name in the newspaper headlines? Well, that’s a question for the Bengal government.

The creation of Louise Brown

The science that brought Louise Brown into the world in 1978 might’ve felt revolutionary, but it had actually been simmering on the scientific back burner for over a century.

Let’s rewind to 1878. While most people were still trying to figure out electricity and internal plumbing, a Viennese embryologist named Samuel Leopold Schenk was already experimenting with fertilising mammalian eggs outside the body. Using rabbits and guinea pigs (science’s most patient test subjects), Schenk mixed sperm with ova in a dish and noted signs of cell division. It was early, imperfect, and not quite a pregnancy, but it was the first whisper of what IVF could one day be.

In 1934, two researchers named Gregory Pincus and Ernst Vinzenz Enzmann made headlines for reportedly achieving the first IVF pregnancy in rabbits. But later scrutiny revealed an important technicality: their fertilisation didn’t happen in vitro (Latin for “in glass”) but in vivo – inside the body. They’d reimplanted their eggs too soon, before they had matured, and nature took over from there. Promising, but not quite the scientific mic-drop they thought it was. In 1959, US scientist Min Chueh Chang successfully used IVF to impregnate a rabbit, officially marking the technique’s first true success in mammals.

In the late 1960s, gynaecologist Patrick Steptoe and reproductive biologist Robert Edwards joined forces after a fateful lecture on laparoscopy. Steptoe had been pioneering this minimally invasive technique to retrieve eggs, while Edwards was obsessed with understanding human fertilisation. Together, they cracked one problem after another: how to mature eggs with hormonal stimulation, how to retrieve them safely, how to fertilise them in a petri dish, and (critically), when to reimplant the fertilised embryo.

By 1976, the duo began working with a couple from Bristol who had spent nearly a decade trying to conceive: Lesley and John Brown. Lesley had blocked fallopian tubes, a hurdle that IVF was uniquely poised to bypass. On 10 November 1977, Steptoe and Edwards tried a new approach: no fertility drugs, just a natural cycle IVF procedure, fertilisation in a humble petri dish, and then implantation.

Nine months later, Louise Joy Brown was born. The media called her a test tube baby. The scientists knew better – it was a petri dish that did the trick. But either way, the world had changed.

The creation of Kanupriya Agarwal

In 2010, at the age of 85, Robert Edwards finally got the nod he’d long deserved: the Nobel Prize in Medicine. His collaborator Patrick Steptoe, sadly, couldn’t be honoured. Nobel rules don’t allow posthumous awards, and Steptoe had passed away in 1988.

The timing of the award felt almost poetic. It landed close to the anniversary of another quiet revolution in reproductive science – one that had unfolded not in Cambridge or Oldham, but in Kolkata. In October of 1978, Indian reproductive scientist Subhas Mukherjee announced the birth of Kanupriya Agarwal – nicknamed Durga – the world’s second and India’s first IVF baby. Headlines at the time, however, only mentioned Edwards’ team and the birth of Louise Brown.

While Edwards’ method involved fertilising an egg outside the body and then implanting it in the uterus, Mukherjee had independently worked out other key pieces of the IVF puzzle. As early as the late 1970s, he had become the first in the world to use hormone treatments to coax ovaries into producing more eggs, the first to harvest those eggs through a far less invasive transvaginal route, and the first to successfully freeze and thaw embryos before implantation.

In a 1997 article in Current Science, reproductive biologist TC Anand Kumar – the man responsible for the birth of India’s second documented IVF baby – told the world that Mukherjee and his colleagues were “ridiculed by the medical fraternity and victimised by bureaucracy”. At the time of Mukherjee’s discovery, the state of West Bengal was barely a year into Left Front governance and had little patience for maverick science. Instead of peer review, Mukherjee got a panel led by a radiophysicist (yes, really) and staffed by scientists unfamiliar with reproductive medicine. Unsurprisingly, they dismissed his work.

It only got worse. By late 1978, Mukherjee was banned by the Bengal government from presenting his findings at scientific conferences. An invitation from Kyoto University was similarly denied. In 1981, he was abruptly transferred to an eye hospital and expected to work in an area of medicine completely outside his field. That July, at just 50 years old, Subhas Mukherjee tragically died by suicide.

The world was led to believe that India’s first IVF baby was born 5 years later in 1986, under the care of the aforementioned Anand Kumar. But in a twist worthy of a detective novel, Kumar later unearthed Mukherjee’s handwritten lab notes, personal correspondence, and experimental logs. After cross-checking with Durga’s parents and scrutinising every technical detail, he reached an unavoidable conclusion: Mukherjee had done it first. Putting his personal accomplishment aside, Kumar vowed to make sure that the world knew that the birth of India’s first test tube baby was the result of Mukherjee’s work, not his own.

It took nearly two decades, but thanks to Kumar’s dogged determination, Mukherjee’s name was finally restored to the record. The Indian Council of Medical Research acknowledged him as the true pioneer behind India’s first successful IVF birth. And Durga herself, who now works as a marketing executive in Delhi, came forward on her 25th birthday to tell the world who she was, and to pay tribute to the man who made her birth possible.

Remembering Subhas Mukherjee

Thanks to the integrity of Anand Kumar, Mukherjee’s work is now recognised in the Dictionary of Medical Biography. It’s no Nobel Prize, but it’s a small, overdue nod in a history that very nearly erased him.

The story of IVF is often told as a tale of science defying biology to offer hope where there was none. But it’s also a story about who gets remembered and why. For every name etched in textbooks, there are others – like Subhas Mukherjee – whose brilliance are buried under bureaucracy, politics, or prejudice. That his legacy now lives on, not only in Durga but in the millions born through techniques he helped pioneer, is a quiet kind of justice. History may be slow to correct itself, but sometimes, it does.

About the author: Dominique Olivier

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

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting. She now also writes a regular column for Daily Maverick.

Dominique can be reached on LinkedIn here.

PODCAST: Tariffs – Pause and effect

Investec No Ordinary Wednesday
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PODCAST: Tariffs – Pause and effect

Listen to the podcast here:

Where are investors seeking refuge amid uncertainty? And will the recent rebound in global stocks last? In this episode of No Ordinary Wednesday, Investec Wealth and Investment International’s Chief Investment Strategist Chris Holdsworth, and investment strategist Osa Mazwai explore the ongoing impact of US President Donald Trump’s tariff policies.

Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.

Also on Spotify and Apple Podcasts:

GHOST BITES (Anglo American | Anglo American Platinum | Cashbuild | Gold Fields | Kumba Iron Ore | Supermarket Income REIT | Orion Minerals | Zeder)

The Finance Ghost
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GHOST BITES (Anglo American | Anglo American Platinum | Cashbuild | Gold Fields | Kumba Iron Ore | Supermarket Income REIT | Orion Minerals | Zeder)

Anglo American can be thankful for iron ore (JSE: AGL)

And yes, diamonds are still in trouble

2025 is a major transitional year for Anglo American. They will be demerging Anglo American Platinum (see further down) in the next month or so. They are in the process of selling the Steelmaking Coal business to Peabody Energy and the Nickel business to MMG Singapore. And although they have a new long-term diamond sales agreement in place with the Government of Botswana, they would love to sell De Beers.

The focus is on copper, iron ore and manganese ore in terms of currently producing assets. Although copper performed in line with guidance, production was still 15% lower. Iron ore (a combination of Kumba and Minas Rio) saw production increase by 2%. Manganese ore struggled, down 60% thanks to the impact of a tropical cyclone in March 2024.

Steelmaking coal saw a drop of 41% in production due to an underground fire. This is what triggered a recent announcement that the deal with Peabody Energy may still have some issues to overcome. I don’t know about you, but that kind of drop sounds like a material adverse change to me. They are still aiming to complete this deal by the third quarter.

Diamond production fell by 11%, which they call a “production response” to the “prolonged period of lower demand” – in other words, there aren’t enough people who want expensive mined diamonds.

In good news, commodity prices look much better year-on-year across copper and iron ore, with a modest uptick in the basket price for PGMs. As for diamonds, the price is down 38% year-on-year. It turns out that “forever” is a more flexible term than the De Beers ads would have us believe.

A sharp drop in production at Anglo American Platinum (JSE: AMS)

A seasonal impact was expected, but there were other issues

Anglo American Platinum (Amplats) has enjoyed a year-to-date share price increase of 12.6%. Despite all the chaos out there, the market is for some reason believing in platinum again – at least, to some extent.

Sadly, these companies still can’t catch a break. Amplats had to deal with flooding at the Tumela mine in February, driving an 8% decrease in production at own-managed mines. Adjusting for the flooding, production was flat. Unfortunately, you can’t just adjust for something like that.

Refined PGM production is seasonally lower at this time of year due to stock counts and planned maintenance, but the issues like the flooding still didn’t help. Production fell by a substantial 30% and sales volumes were down by a similar percentage.

Despite this, guidance for the full year is unchanged at this stage.

Notably, the average realised basket price was up 3% in dollar terms. Platinum was 11% higher and ruthenium increased 36%, but palladium was down 8%. This is a timely reminder that you can’t just track the platinum price and assume that the basket is changing by a similar percentage. Also, don’t forget the currency impact – the ZAR basket price is down 1%.

The company expects to start trading under the name Valterra Platinum from 2nd June. Perhaps a new name will also lead to improved luck!

Consistent growth at Cashbuild (JSE: CSB)

And most of it is coming from volumes, not inflation

Cashbuild provides a sales update each quarter. The latest one represents the third quarter of the financial year, so it’s helpful to see how the year has been progressing.

The answer is: steadily. The latest quarter reflects revenue growth of 5% year-on-year, a number that I’ve become accustomed to seeing. Existing stores were good for 4% and the stores put in place since July 2023 contributed 1% growth.

Volumes were up 7% and selling inflation was 1.6% at the end of March. I can therefore only assume that the sales mix is responsible for such a volumes and pricing combination ending up at 5% overall revenue growth.

Cashbuild South Africa, which is 82% of the group, grew by 5% for the quarter and 6% year-to-date, so there’s a slight slowdown there, but not by much. The Common Monetary Area businesses (6% of total sales) grew 2% this quarter, with a flat performance year-to-date. Botswana and Malawi (5% of sales) had a pretty incredible quarter, up 26%! The year-to-date performance for those countries is only 6% though.

Finally, the recurring headache that is P&L Hardware is a disappointment once more, with sales down 8% for the quarter. They are up just 2% year-to-date.

The share price has had a horrible time this year, down 26%. If we actually see a rate cut soon in South Africa, that should help catalyse some growth here.

Good news for Gold Fields in Ghana (JSE: GFI)

There’s never a dull moment in Africa

African governments don’t exactly have a reputation for being easy to deal with. Last week, we saw Gold Fields announce that they couldn’t reach an agreement with the government in Ghana around the Damang mine, leading to what was essentially an eviction notice.

A few negotiations later, there’s now a new mining lease in place for 12 months. That’s not exactly a long-term agreement, now is it? At least mining can restart now, subject to various permits and a ratification by parliament. In the meantime, Damang will process surface stockpiles.

By the end of 2025, they will finalise the bankable feasibility study to extend the life of the mine. As for who will benefit from that, the government of Ghana requires the parties to work towards a “transition of the asset to ownership by the people of Ghana” – but the announcement doesn’t say anything about the extent of that ownership.

There’s a broader story with the government in Ghana, as the Tarkwa mine is also in that country. Mine lease extensions are due for renewal in 2027, so this probably won’t be the last time that we see some stressful negotiations.

A happier tune at Kumba Iron Ore (JSE: SPR)

There’s even an improvement in rail performance

Kumba Iron Ore released a production and sales report for the quarter ended March 2025. We are so used to seeing disappointing stuff around Transnet and the related impact on production, so it really is great to see an upswing in fortunes. Of course, there’s a very low base effect here, but let’s focus on the positives.

A 5% improvement in Transnet’s rail performance supported a 6% increase in sales volumes. This allows Kumba to maintain its production and sales guidance for the year, as well as the unit cost guidance. You can see that they aren’t getting ahead of themselves here.

Despite the sales increase, total production was actually down 3% as they decided to drawdown on finished stock at Sishen. Again, this is a sign of conservatism in the group. It’s going to take a long time for Transnet to rebuild any kind of trust in the sector, leading to sustained higher production.

In terms of pricing, they indicate that they achieved an average realised FOB export price of $98/wmt, which is 11% above the benchmark price. I’m not sure why they didn’t give the price in the comparable quarter in the announcement. I went digging for last year’s SENS announcement and found that it was $89/wmt, so they’ve even seen an improvement in price!

Despite a clear improvement, the share price is down 29% over 12 months. Is the market being too conservative here?

Supermarket Income REIT is seeding a joint venture with Blue Owl Capital (JSE: SPR)

Blue Owl Capital is a large US alternative asset manager

Supermarket Income REIT has entered into a joint venture arrangement with Blue Owl Capital, a US alternative asset manager with over $250 million in assets under management.

The structure will see Supermarket Income REIT seed the joint venture with eight property assets from the existing portfolio. The pricing is a 3% premium to the book value as at December 2024. The combined value is £403 million and the average net initial yield is 6.6%.

The key here is that the REIT will retain a 50% interest in the joint venture, which means they are effectively selling half of the portfolio to Blue Owl at the above valuation. The net cash consideration is around £200 million. Now, here’s the kicker: the REIT will also receive a 0.6% management fee on the gross asset value, as well as a potential performance fee.

This is clearly a ploy to improve return on equity, as they are unlocking cash at a solid valuation, plus they are earning a management fee on the gross value of the joint venture, not only their half. The idea is for the joint venture to grow over time, with a plan to reach £1 billion in assets. Simply, Supermarket Income REIT is bringing the expertise (and some existing properties) and Blue Owl is bringing the money.

The joint venture itself is expected to be financed at a loan-to-value (LTV) of 55%. The REIT will use the proceeds from the joint venture to reduce debt and the company LTV is expected to be 31%.

Orion Minerals has secured a loan of $2 million from a shareholder (JSE: ORN)

Junior mining is all about raising capital to keep feeding the capex machine

Orion Minerals announced that a $2 million convertible loan facility has been put in place with the entertainingly-named Ratel Growth. A previous director, Thomas Borman, is the controlling shareholder of that company.

The idea here is that the loan balance will be set off against the amount subscribed for by Ratel Growth in future capital raises. The debt is unsecured and the interest rate is 12% per annum, so this seems like a decent deal for Orion in terms of access to funding. I think it’s a strong show of faith by the ex-director in what Orion is doing at its projects.

Zeder faced some valuation pressures in Zaad (JSE: ZED)

When looking at the net asset value per share, remember to adjust for the dividend

Zeder’s net asset value (NAV) per share was R1.77 as at the end of February 2025. The drop of 71 cents year-on-year is mainly because of the special dividend of 61 cents. As you can see though, there was also some downward pressure on NAV from valuation movements, as the dividend cannot explain the entire move.

Zaad is a business with complex geographical exposures. There are operations in Africa and Turkey, as well as in South Africa. The valuation of the South African assets went the right way, but not to such an extent that it could offset the difficulties in Turkey and Africa.

Zeder remains focused on selling assets and distributing cash to shareholders. This is likely going to require piecemeal disposals of the Zaad businesses, with the most recent example being an announcement in March to sell the operations in Zimbabwe, Mozambique and Zambia for a total of R135 million.

Nibbles:

  • Director dealings:
    • The CEO of Sun International (JSE: SUI) sold shares worth R8.1 million related to share awards. The announcement isn’t explicit on whether this is only the taxable portion.
    • Standard Bank (JSE: SBK) keeps telling us a promising story about 2025 (and they just released pretty solid quarterly earnings), yet directors and execs are happy to sell shares. The latest example is the CEO of CIB (with a front-row seat to corporate dealmaking, including in Africa) selling shares worth R6.9 million.
    • Des de Beer is still at it, buying shares in Lighthouse Properties (JSE: LTE) worth R5.9 million.
  • Clientèle (JSE: CLI) announced the acquisition of Emerald Life back in November 2024. The deal was intended to be funded through the issuance of preference shares to Investec. Although shareholders approved the deal structure, subsequent engagement with the Prudential Authority has led to a change to the structure. They will fund it through a combination of free cash and an issuance of preference shares by a subsidiary of Clientèle to a subsidiary of Investec to the value of R570 million. There are then some subsequent steps to get the funding to the right place in Clientèle through a tax efficient process. Due to the amended structure, another shareholder circular and vote will be required to make the relevant legal amendments.
  • Showmax continues to gobble up capital, with MultiChoice (JSE: MCG) announcing that a total of $145 million in equity funding has gone into Showmax since 27 September 2024. Remember, this is in partnership with Comcast Corporation subsidiary NBCUniversal Media, so this isn’t entirely MultiChoice’s burden. Still, if you wondered why the MultiChoice balance sheet is under pressure, here’s one of your answers.
  • Eastern Platinum (JSE: EPS) announced that Charlie Liu is the new non-executive chair, replacing George Dorin who passed away in March. Liu is the chairman of Ka An Development Co. Limited, a long-term shareholder of Eastern Platinum.

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

Supermarket Income REIT plc (SUPR) has entered into a strategic joint venture with funds managed by US alternative asset manager Blue Owl Capital. SUPR has seeded to the joint venture eight high yielding, omnichannel UK supermarket assets from an existing portfolio at a 3% premium to book value as at 31 December 2024. The portfolio has a value of £403 million. The joint venture will be equally held so SPUR will receive a net cash consideration of c.£200 million in respect of the sale of the assets. It will also receive a management fee of 0.6% per annum of the gross asset value for the ongoing management of Blue Owl’s interest in the JV. The JV will seek to acquire additional supermarket assets with the view to growing the platform up to £1 billion over the coming years.

The Newco consortium comprising Entsha [DKMS Group] and Falcon Holdings [Zahid Group] which late last year sought to take Barloworld private by acquiring the remaining 78% stake in the industrial conglomerate, has secured the support of the Public Investment Corporation (PIC) for its standby offer. The initial offer of R120 per share (excluding the R3,10 dividend) at a significant premium was rejected by shareholders in February, triggering the standby offer. The PIC, which holds c.21.9% of Barloworld, has done an about turn and has undertaken to support the standby offer on condition the company implements a 13.5% B-BBEE transaction after delisting. Should the Barloworld remain listed, the PIC will be entitled to retain a stake in the company as required for the PIC to maintain its internal index weighting requirement. To date, undertakings by shareholders to accept the standby offer together with the Consortium’s and the Barloworld Foundation’s shareholding equate to 46.93%. The consortium needs to receive acceptances from 90% of affected shareholders to enable the squeeze-out of the remaining shareholders to accept the offer. If this is achieved, then Barloworld will be delisted.

Diversified technology group 4Sight has acquired X4 Solutions and XFour Technology as the company expands its digital enterprise ecosystem and strengthens its footprint in workforce technologies. The acquisitions, specialise in integrating and optimising HR and payroll systems in 20 countries across Africa with the ability to tailor enterprise-grade offerings to the unique dynamics of the African labour market. The purchase consideration payable will be split into two separate tranches with an initial payment of R21,2 million comprising equally of cash and share components. A second tranche (earn-out) of R21,2 million is subject to financial performance of the companies over the year to 28 February 2026. The acquisition is a category 2 deal so does not require shareholder approval.

Absa Bank has proposed a repurchase of all (4,944,839) the non-redeemable, non-cumulative, non-participating preference shares by way of two separate, but concurrent offers. An offer, by way of a scheme of arrangement for a cash consideration of R930 per preference share following which the shares will be delisted for the JSE, or failing which, a general standby offer for a portion of the preference shares for a cash consideration of R930 per standby offer share. The offers represent a premium of 13.4% to the closing price on 16 April and 14.9% to the VWAP of R809.10 being the share price during the 30 trading days up to 16 April 2025. The maximum value of the proposed transaction is R4,598,700,270. Absa has received irrevocable undertakings from shareholders holding 26.93% of the preference shares to vote in favour of the scheme.

Unlisted Companies

African fintech investor Crossfin has announced an investment in South African payments advisory and platform solutions company DigiSquad. The size of the investment which remains undisclosed will be used to scale activities and expand its sphere of influence to a broader cross-section of the African payments and fintech landscape. Founded in 2015, the company offers services such as financial consulting, product development and data analysis to clients across Africa and in the US. It recently launched DigiEngine, its flagship platform. For Crossfin, the DigiSquad cloud-based payments platform is of relevance across its portfolio.

Mergence Investment Managers, an institutional fund manager and pioneer in impact and infrastructure investing, has acquired a controlling stake in strategic digital infrastructure assets located within the residential precincts of Waterfall City in Gauteng. The acquisition was executed through the Mergence Infrastructure & Development Equity Fund II. The deal gives Mergence exclusive rights to provide fibre connectivity to c. 4,000 residential units with scalable capacity to expand to more than 9,500 units in the short to medium term. In addition, the acquisition includes a 250-kilometre fibre optic backbone extending from Waterfall City to the Botswana border at Kopfontein with significant spare duct capacity to enhance connectivity across economic nodes such as Rustenburg, Brits, Cullinan, Zeerust and Groot Marico. Financial details were undisclosed.

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

Shareholders of Texton Property Fund will receive a special gross dividend of 20.13 cents per ordinary share out of income reserves from the 2025 financial year profits amounting to R66,44 million. In addition, shareholders will receive a further distribution of 79.87 cents per share, representing a capital reduction of the contributed tax capital of the company, equal to R263,6 million.

Italtile Staff Share Scheme Trust has disposed of 1,258,217 Trust shares off market to Ceramics at a market value of R10.71 per share for a total transaction value of R13,48 million. The shares will remain part of the authorised and issued share capital of the company and will be held for future use by Ceramics.

This week the following companies announced the repurchase of shares:

Brimstone Investment has proposed a specific repurchase of vested Forfeitable Shares, the maximum number of which will not exceed 2,349,018 N shares. The shares represent 1.04% of the company’s current issued N ordinary share capital. The repurchase price is still to be determined but based on an indicative value of R4.67 (the price at which the shares traded over the 30 business days up to and including 29 March 2025) the maximum consideration to be paid would be R10,969,914.

Sea Harvest has also proposed a specific repurchase of vested Forfeitable Shares. The aggregate number of Forfeitable Shares repurchased will not exceed a maximum of 5,177,987 shares, representing the total number of Forfeitable Shares due to Vest in November 2025 and March 2026. Using an indicative value of R7.00, as the exact specific repurchase price is not known at this stage, the value of would be approximately R36,245,909. The specific repurchase would represent a repurchase of 1.44% of the Sea Harvest’s issued share capital.

On March 6, 2025, Ninety One plc announced that it would undertake a repurchase programme of up to £30 million. The shares will be purchased on the open market and cancelled to reduce the Company’s ordinary share capital. This week the company repurchased a further 720,501 ordinary shares at an average price of 137 pence for an aggregate £990,914.

In its annual financial statements released in August 2024, South32 announced that it would increase its capital management programme by US$200 million, to be returned via an on-market share buy-back. This week 419,064 shares were repurchased at an aggregate cost of A$1,13 million.

On 19 February 2025, Glencore plc announced the commencement of a new US$1 billion share buyback programme, with the intended completion by the time of the Group’s interim results announcement in August 2025. This week the company repurchased 14,000,000 shares at an average price per share of £2.59 for an aggregate £36,25 million.

Hammerson plc continued with its programme to purchase its ordinary shares up to a maximum consideration of £140 million. The sole purpose of the buyback programme is to reduce the company’s share capital. This week the company repurchased 215,611 shares at an average price per share of 254 pence for an aggregate £549,111.

In line with its share buyback programme announced in March 2024, British American Tobacco plc this week repurchased a further 516,278 shares at an average price of £31.77 per share for an aggregate £16,4 million.

During the period 14 to 17 April 2025, Prosus repurchased a further 5,236,116 Prosus shares for an aggregate €197,23 million and Naspers, a further 296,850 Naspers shares for a total consideration of R1,33 billion.

Two companies issued profit warnings this week: Zeder Investments and Aspen Pharmacare.

During the week one company issued a cautionary notice: Acsion.

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

Venture capital firm, Readen Holding, has announced the signing of a Memorandum of Understanding to acquire an 80% stake in Nigeria’s Morrich Lottery, a licensed lottery operator in the West African country. Part of the agreement is the integration of Readen’s flagship digital payment solution, Readies, into all Morrich Lottery operations. Readies is a blockchain-powered hybrid payment platform that integrates traditional finance with cryptocurrency, delivering faster settlements, lower transaction fees, and enhanced financial flexibility. The platform features cross-border payment capabilities and state-of-the-art fraud prevention — making it an ideal solution for gaming and digital transactions in emerging markets. The deal marks Readen’s entry into the African market.

Canadian oil and gas company, Reconnaissance Energy Africa (ReconAfrica) has entered into a Memorandum of Understanding with Agência Nacional de Petróleo, Gás e Biocombustíveis or National Oil, Gas and Biofuels Agency (ANPG) for a joint exploration project in the Etosha-Okavango basin, located onshore in southeastern Angola. ReconAfrica will have an 80% working interest in the MOU area and Sonangol will hold the remaining 20%. Under the terms of the MOU, ReconAfrica will initiate and coordinate geological studies, conduct a regional oil and gas seep study, and plan for a 2D seismic programme, as well as perform detailed geochemical analysis and sampling of any oil and gas seeps identified within the MOU area, over a 24-month period.

Moroccan startup, VOVE ID, has secured an undisclosed investment from The Baobab Network. Founded in 2024, VOVE ID is a high-end digital identity verification company whose platform supports features such as biometric authentication and automated document checks. The investment will be used to support the regtech’s regional expansion, platform development and team growth.

ASX-listed Traka Resources announced its entry into the Siguiri Basin in Guinea, following the signing of an exclusive agreement with Guinean based Alamako Corporation International to earn-in a 75% interest in the Didi Gold Project. The earn-in will be completed through the sole funding and undertaking of the exploration programme of the project and the payment of US$1 million in cash at various dates.

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

Logistical challenges and solutions in African e-commerce

Konrad Fleischhauer and Bhargav Desai
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Logistical challenges and solutions in African e-commerce

THE STATE OF E-COMMERCE AND THE DEMAND FOR LOGISTICS SOLUTIONS

The e-commerce sector in Africa is experiencing remarkable growth, driven by a youthful, tech-savvy population and rapidly expanding internet penetration. The International Trade Administration (ITA) expects the number of online shoppers in Africa to reach 520 million by 2025, a 56% increase from the 334 million reported in 2021, with revenues projected to surpass US$46 billion by 2025.1

Despite this promising trajectory, logistics remain a significant barrier due to underdeveloped infrastructure and high operational costs. Addressing these challenges is critical for sustaining and scaling Africa’s e-commerce growth story. The purpose of this article is twofold, namely (i) to touch on several logistical challenges currently being experienced by African e-commerce companies, and (ii) to highlight a number of solutions and initiatives undertaken to address such logistical challenges.

LOGISTICAL CHALLENGES

Africa is witnessing a digital transformation in retail, with countries like Nigeria, South Africa and Kenya at the forefront. In Nigeria alone, e-commerce contributes around 10% of all retail sales, 2 largely propelled by platforms like Jumia, which reported 30 million unique visits per month in 2023, 3 compared to 10 million visits on Takealot in South Africa.4 However, rural and peri-urban areas, home to a majority of the population, often remain underserved due to poor logistics infrastructure.

According to the ITA, cross-border e-commerce accounts for a growing share of total online transactions, highlighting the need for seamless regional logistics networks. Unfortunately, the average cost of transporting goods in sub-Saharan Africa is 50% to 75% higher than in other developing regions globally, making last-mile delivery a persistent challenge.5

Poor road networks result in extended delivery times, while fragmented regulatory environments complicate cross-border trade. For instance, across the continent, only 43% of roads are tarred; 30% of these paved roads are located in South Africa. 6 This deficit in paved roads has been detrimental to building a modern economy as 80% of goods are transported by road. 7 Additional limitations include customs clearance, which can take up to 30% longer in Africa compared to the global average, 8 and warehousing capacity, which remains limited, with an average of only one square meter of storage per capita being available in Africa, compared to three square meters in Asia.9

Postal services in most African countries are extremely limited or non-existent, hamstringing e-commerce operations. According to the World Bank, South African container ports rank among the most inefficient, owing to infrastructure gaps, with port operator Transnet seeing its losses top US$381 million in 2023,10 and port and rail failures estimated to be costing the South African economy up to US$19 billion a year. 11

In addition to the above, currency exchange risks, inconsistent tariffs, and inefficient customs procedures also remain barriers for effective e-commerce in Africa.

Nonetheless, these challenges present opportunities for investment. The African Continental Free Trade Agreement (AfCFTA), which aims to create a single market for goods and services across 54 African countries, could significantly enhance regional trade logistics. By 2030, AfCFTA is expected to boost intra- African trade by 52%, underscoring the importance of harmonised logistics systems.12

INNOVATION, INVESTMENT TRENDS AND SOLUTIONS

Innovative solutions are emerging. Blockchain technology, for instance, is being piloted to streamline customs processes and improve transparency. Similarly, digital payment systems like M-Pesa in Kenya and MTN Mobile Money in various West African countries have become household names. These platforms allow users to store, send and receive money using mobile phones, offering a convenient alternative to traditional banking, especially in regions with limited banking infrastructure, fostering financial inclusion. These systems have reduced transaction barriers, facilitating smoother cross-border trade.

African countries are still behind global retail banking habit averages, with almost half of African adults not in possession of any formal bank account. In terms of saturation, Kenya leads the African continent with 88% of its population having bank accounts, followed by South Africa (82%), Nigeria (51%), Morocco (42%), and Egypt (38%).

The result is that debit card payment methods only represented 10% of transactions in 2021, while credit card ownership rates are low, at an average 2% for the entire continent.13 Therefore, online payments remain a perennial challenge for businesses wishing to target e-commerce consumers in African markets.

To address some of the challenges discussed above, and other logistical barriers, significant strides are being made in logistics innovation. For instance:

Drone technology: Startups like Zipline have deployed drones to deliver medical supplies in rural Rwanda, showcasing the potential for such technologies in broader e-commerce applications.

Warehousing expansion: Investments in urban fulfilment centres, such as DHL’s multimillion-dollar hubs in Lagos and Nairobi, are enhancing storage and distribution efficiency.

AI and data analytics: Companies are leveraging AI to optimise delivery routes, reducing costs and transit times. For example, Jumia’s logistics network uses data-driven tools to handle over 20 million packages annually.14

Funding: The African Development Bank has allocated US$10 billion to transport infrastructure projects between 2020 and 2030, aiming to improve road networks critical for e-commerce logistics in Africa. 15

Partnering with global shipping firms: Cross-border trade is a vital requirement for growth for e-commerce in Africa. Platforms like Konga and MallforAfrica have expanded their reach by partnering with global shipping firms, enabling African products to access international markets.

SCALING E-COMMERCE THROUGH LOGISTICS TRANSFORMATION

Africa’s e-commerce sector is poised for significant growth, but its potential hinges on resolving logistics challenges. Investments in infrastructure, adoption of advanced technologies, and regional policy harmonisation are crucial. With over 60% of Africa’s population under 25 years old16 and mobile internet penetration expected to reach 68% by 2025,17 the continent’s digital economy is set for a bright future. By solving the logistics puzzle, Africa can unlock the full potential of its e-commerce market and drive broader economic development.

Given the challenges and the innovative solutions being developed, there are significant infrastructure opportunities in this space. To facilitate easier access to capital for institutions in this sector, focused efforts are essential. PSG Capital has extensive experience in supporting capital-raising initiatives, aiding the growth and development of companies and logistics industries across Africa.

Konrad Fleischhauer and Bhargav Desai are Corporate Financiers | PSG Capital


This article first appeared in DealMakers AFRICA

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

1 – https://www.trade.gov/rise-ecommerce-africa
2 – https://www.dw.com/en/africa-sees-rise-in-e-commerce-digital-marketplace
3 – https://www.dw.com/en/africa-sees-rise-in-e-commerce-digital-marketplace
4 – https://www.dw.com/en/africa-sees-rise-in-e-commerce-digital-marketplace
5 – https://www.trade.gov/rise-ecommerce-africa
6 – https://www.cgdev.org/project/designing-roads-africas-future
7- https://www.cgdev.org/project/designing-roads-africas-future
8 – https://www.dw.com/en/africa-sees-rise-in-e-commerce-digital-marketplace
9 – https://www.dw.com/en/africa-sees-rise-in-e-commerce-digital-marketplace
10 – https://www.transnet.net/InvestorRelations/Pages/Annual-Results-2024.aspx
11 – https://www.africanews.com/capacity-gaps-slow-competitiveness-of-south-africasports-business-africa
12 – https://www.trade.gov/rise-ecommerce-africa
13 – https://www.trade.gov/rise-ecommerce-africa
14 – https://rwandatechnews.com/zipline-revolutionising-healthcare-logistics-in-rwanda/
15 – https://ssir.org/articles/entry/zipline-health-innovations-africa
16 – https://www.logupdateafrica.com/e-commerce/e-commerce-logistics-africas-growth-frontier
17 – https://www.logupdateafrica.com/e-commerce/e-commerce-logistics-africas-growth-frontier

GHOST BITES (4Sight | Afrimat | Barloworld | Capitec | Emira Property Fund | Quilter)

The Finance Ghost
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GHOST BITES (4Sight | Afrimat | Barloworld | Capitec | Emira Property Fund | Quilter)

4Sight has announced an interesting acquisition (JSE: 4SI)

And perhaps most importantly, they are paying for part of it with shares

4Sight Holdings is a rather interesting small cap on the local market. For starters, check out the jump in the share price since mid-2023:

Clearly, the market is showing some interest here. With the news of an acquisition of X4, a group that focuses on payroll solutions to customers across more than 20 African countries, there’s even more to sink your teeth into. This is a solid business with recurring income, offering a number of payroll-related services like employee self-service platforms that integrate with WhatsApp. You can immediately see how a solution like that can be useful in Africa.

The total deal value is R42.4 million if the profit target is achieved. The structuring here is clever, with the amount split into two equal tranches. The first tranche of R21.2 million is 50% cash, 50% shares. The share component is calculated based on the 30-day volume weighted average price (VWAP). The second tranche (the earn-out tranche) is also on a 50-50 basis of cash and shares, calculated at the time based on the 30 day VWAP.

I certainly can’t fault that. There’s a solid mix of upfront and deferred payments, as well as that rarest of things on the JSE: a small cap actually using its shares as acquisition currency!

As for the valuation, if the net profit after tax for the year ended February 2026 is R6.06 million, then the full additional tranche of R21.2 million is payable. If that happens, the earnings multiple would’ve been 7x.

If the company achieves less than R3.03 million in net profit after tax for that year, then no amount is payable on the second tranche. For amounts between R3.03 million and R6.06 million, there’s a pro-rata payment. You can see that the multiple of 7x is relevant here once more.

Interestingly, the multiple isn’t consistent if they achieve over 110% of the target net profit after tax i.e. for any amount in excess of R6.66 million, in which case there’s a ratchet on the multiple that leads to the second tranche being 120% of the base expected payment.

And in case you’re wondering, net profit after tax was just under R5 million for the year ended February 2025. The base target for the earn-out therefore reflects growth of 21.5%, which gives you a sense of what might be possible here.

The key personnel of the seller will pledge all 4Sight shares received as purchase consideration, with the pledge lasting until 28 February 2028. This locks them in for a few years, with 4Sight having the option to repurchase shares from any key personnel leaving the group during that period.

Overall, this looks like a professionally structured deal that shows a lot of promise. It’s a Category 2 transaction, so there is no shareholder vote on the transaction. The implementation date for the deal is 30 April 2025.

I wish we saw a lot more of this type of dealmaking among small caps!

Even Afrimat’s diversification wasn’t enough for the cycle this year (JSE: AFT)

The drop in HEPS was even higher than in the interim period

The year ended February 2025 is one that Afrimat will want to forget as quickly as possible. Operating in the commodities sector means that you need to have a strong stomach for the bad years, when the cycle dishes out a gut punch despite the best efforts of management.

It was clear that this was going to be an ugly year, as interim HEPS was down by 79.9%. Things got worse rather than better, with HEPS for the full year expected to be between 85% and 90% lower.

The iron ore market did the damage, with a combination of lower prices and a reduction in volumes by ArcelorMittal South Africa in the first half of the financial year. Although volumes have recovered over the rest of the year, this doesn’t solve the iron ore pricing pressure or the ongoing frustration of Transnet running well below the allocated rail capacity.

Afrimat is also still incurring losses in cement, as it will take time for the Lafarge acquisition to reach its full potential. A further issue was found in the anthracite business, where exports were impacted by the closure of the border with Maputo.

There were some positives, like the Construction Materials segment that enjoyed a strong performance in aggregates and a better story in margins. Sadly, this was nowhere near enough to offset the iron ore pressures, hence it was a poor outcome for investors over the past 12 months.

Although it’s very difficult to predict where the cycle could go, Afrimat does sound confident that the year ahead will at least see a partial recovery.

The PIC is accepting the offer made to Barloworld shareholders (JSE: BAW)

And honestly, I’m not surprised

In my recent writing on Barloworld, I’ve pointed out that I think shareholders are being too greedy on this one. Much as we saw in the Bell Equipment offer, activist minority shareholders dug their heels in and refuse an offer that looks pretty reasonable to me on paper. At this point in the cycle, if someone offered me a reasonable price for businesses exposed to broader commodities, I would take it and run.

The PIC clearly shares that sentiment, with the decision having been made to accept the offer from the consortium. The PIC holds 21.93% of the shares in Barloworld, so this takes total acceptances to 46.93% of Barloworld’s shares.

Interestingly, if they reach the 90% acceptance threshold that would be required for a squeeze-out transaction (a mechanism to force the remaining shareholders to accept the offer), then Barloworld would be delisted and the consortium would need to implement a B-BBEE transaction. This is one of the conditions of the PIC’s acceptance of the offer. It’s highly likely that this would in any event be a condition of the Competition Commission approved the deal.

If such a transaction is needed, it will be for 13.5% of the shares in Barloworld. As part of the broader Black Ownership calculation, this would presumably be sufficient for Barloworld’s needs. If Barloworld stays listed, then no such deal will be done.

As a further nuance in this deal, the consortium has the right to walk away from the entire thing if they don’t achieve a 90% acceptance rate. Although I doubt strongly that they would walk away after all this effort, I also wouldn’t be surprised if they are looking to get an outright controlling position. At the current acceptance level of 46.93%, they aren’t far off.

Capitec just keeps winning (JSE: CPI)

Investors can’t get enough of this story

Capitec closed 7% higher after releasing results. This takes the 12-month performance to 54%. That sounds wild when you consider the global backdrop to this performance, but headline earnings increased by 30% in the year ended February 2025 and so there’s no shortage of growth to back this up.

Cash isn’t a problem either, with the dividend up by 34%. Juicy.

There are still those who believe that Capitec is focused on only the lower income segments and that they will run out of growth. If you’ve been paying attention, you’ll know that there is far more to Capitec than just its original client base. For example, they’ve achieved growth of 26.5% among high earners (over R50,000 per month) and they have a rather ridiculous 51% market share of the South African youth population (ages 16 – 35).

Bank accounts are sticky. Switching banks is a pain. To have that kind of market share among younger clients is an absolute triumph. These are the reasons why the market is happy to pay a large multiple for the Capitec growth story, as the drivers of growth are clearly visible.

There are other important drivers of growth, like value-added services and Capitec Connect, which saw a 61% jump in income. Once you’ve built a big platform, it’s possible to generate tons of additional income by winning a greater share of wallet. The scary thing is that there are no heroics here – they are simply taking sensible services to the client base.

Earnings in this period were further boosted by a significant drop in credit impairments of 15%, which took a 10% increase in net interest income and leveraged it up to a 39% jump in net interest income after impairments. Combined with 22% growth in non-interest income (which is a key driver of Return on Equity), they managed a 28% increase in headline earnings excluding AvaFin, or 30% including it.

Speaking of Return on Equity (ROE), this all-important metric increased from 26% to 29%. Most South African banks are running at around half of that level.

The results presentation includes tons of fantastic data, like this slide:

This is the benefit of reading widely in the market. Note the spend in Groceries on the far left and then consider how well Shoprite has been doing in the past few years. Also, look at Pharmacy on the far right and think about the growth drivers for Clicks and Dis-Chem. Finally, look at Home Maintenance and the absolute lack of growth over the past couple of years. DIY businesses have been struggling and this slide shows you why.

Secured home loan products are due to launch mid-2025. Additional loan products are also coming this year, across credit card and earnings-linked debt. This is by a country mile the best post-democracy business story in South Africa and there’s little sign of it slowing down.

Emira Property Fund’s CEO is leaving (JSE: EMI)

The market tends to get nervous of stuff like this

It’s pretty unusual to see a listed company and its CEO part ways suddenly. It sends a message to the market of tough conversations behind boardroom doors, which naturally creates jitters among investors.

What makes this particularly unusual is that Geoff Jennett has been the CEO of Emira since August 2015, so one has to wonder what suddenly changed after nearly 10 years in that position. The only information given in the announcement is that there were “strategic differences” that led to this decision.

Hopefully, more information will come to light when the next CEO is announced.

Even Quilter struggled to grow its assets this quarter (JSE: QLT)

But the key is that net inflows were strong

Whenever I write about businesses in the financial services space that make money from assets under management, like Quilter, I talk about how important it is to look at net flows. Total assets under management will jump around based on market movements that are outside of the control of the company in question. Net flows, on the other hand, are a direct result of the distribution strategy and how well assets are being attracted to the group.

Quilter actually reports assets under management and administration (AuMA), rather than just AUM, with that number practically flat for the three months to March 2025. The net inflows as a percentage of opening AuMA were 7% on an annualised basis, which is strong. This was unfortunately offset by market and currency movements. Still, it shows that they attracted net inflows during a difficult time.

It gets even better when you look at what Quilter describes as core net inflows, which were 16% higher than the previous record quarter. The High Net Worth segment was a strong performer and the Affluent segment did especially well, particularly driven by lower outflows.

Thanks to all the economic uncertainty around tariffs and the impact that this is having on global asset prices, 2025 could be a less lucrative year than expected at Quilter. Still, with such strong metrics in inflows, they are positioning the business for growth in years to come.

Nibbles:

  • Director dealings:
    • Oddly, the CEO of Sun International (JSE: SUI) seems to have disposed of R45k worth of shares that are linked to a share award but aren’t part of the taxable portion. It’s just strange to see such a small disposal by a CEO. Another odd part of this announcement is that the CFO sold R2.08 million worth of shares that are supposedly the taxable portion of an award, except the full award was worth R2.45 million. I know that taxes are rough in South Africa, but nobody’s tax rate is that high.
  • Europa Metals (JSE: EUZ) is still figuring out what its future holds. They either need to wind the thing up, or find a suitable acquisition. In the meantime, they’ve sold 1.5 million shares that they hold in Denarius Metals Corp, generating around £450k in the process. They will use this for various payments and for “assessing opportunities” – in other words, for professional fees. For context, Europa still holds 5.5 million shares in Denarius.
  • Wesizwe Platinum (JSE: WEZ) is still struggling to get its financials for the year ended December 2024 done. They are hoping to get the annual financial statements out by 31 July 2025, as well as the integrated annual report and notice of AGM by 31 August 2025.

GHOST BITES (Aspen | Coronation | Oasis Crescent | Standard Bank | Tharisa | Texton)

The Finance Ghost
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GHOST BITES (Aspen | Coronation | Oasis Crescent | Standard Bank | Tharisa | Texton)

Brace yourself for a terrible day in the Aspen share price (JSE: APN)

A somewhat shocking announcement came out at market close

If you’re an Aspen shareholder, prepare yourself for a rough Wednesday. At 5pm on Tuesday, the company released an announcement about “potential risks” – and we aren’t talking about small numbers here.

A material contract dispute in the Manufacturing business could impact EBITDA by R2 billion. In such a case, the EBITDA from the Manufacturing business in CER would be less than 50% of what was reported in FY24. To make it even worse, there would be impacts on subsequent years that Aspen isn’t able to quantify at this stage.

All we know at this stage is that the dispute related to a contract manufacturing customer for mRNA products. Aspen has also referenced the risks of US tariff changes and how this would encourage more production in the US vs. other countries, which would hurt Aspen’s contract manufacturing business. This overall situation is the reason for an expected R770 million impairment to technology in the 2025 financial year.

The long-term impact on Aspen is unclear at this stage, as they might be able to fill the manufacturing capacity with pharmaceutical customers who have a strategy that is more suitable to this world of trade wars. Also, they might not.

The company has scheduled a webcast on Wednesday morning. I have no idea where the bottom will be for the share price in response to this news, but I suspect it’s a long way down from current levels.

Coronation’s AUM went nowhere this quarter (JSE: CML)

And no, they still don’t disclose comparatives

Coronation has released its assets under management (AUM) as at 31 March 2025. As always, they haven’t done any favours for shareholders in terms of releasing the comparatives, so we are forced to go digging.

Will this ever change? I’m not holding my breath.

Something else that hasn’t changed is the quantum of AUM, which came in at R676 billion as at March 2025 – exactly the same amount that we saw as at December 2024. At least there’s growth on a year-on-year basis, as they were at R631 billion as at March 2024.

I’ll say it for the millionth time: in this industry, the best business model is to have a force of advisors out there who are scooping up assets. Focusing on only the asset management profit pool (rather than wealth management / advice) just isn’t lucrative enough.

Inflation-beating growth at Oasis Crescent (JSE: OAS)

As a Shari’ah-compliant fund, there is no debt in this structure

Property funds are known for using high levels of gearing, or debt. In South Africa, where the cost of debt is often equal to or even higher than the net initial yield on acquisitions, the introduction of debt is only beneficial for properties that will grow significantly in value. As time has taught us, not all properties end up doing that.

So, the lack of debt in the Oasis Crescent Property Fund isn’t as much of an impediment as you might expect from an economic perspective. Since inception, they’ve grown the NAV and dividend (i.e. total return) by 11.3% per annum, which is more than double the inflation rate of 5.5% per annum over that period.

In the year ended March 2025, they grew the distribution by 7.1% to 120 cents per share (technically, per unit). Based on the current share price of R20.50, the fund is on a trailing yield of 5.8%.

If we look deeper, we find that the net asset value per unit increased by 3.9% to R28.07, so the fund is trading at a discount to NAV – but that’s not surprising when you see how low the yield on NAV would be. In other words, if it traded at NAV, the trailing yield (based on the distribution of 120 cents) would be just 4.3%. That’s not going to happen.

In fact, the current traded yield is already very low relative to other property funds. I suspect that this is because the investor base cannot buy the usual money market and fixed income instruments due to Shari’ah rules, so this fund plugs an important gap and hence enjoys stronger demand than would otherwise be the case.

Double-digit earnings growth at Standard Bank (JSE: SBK)

The quarterly update looks promising

Although local companies are only required to report earnings on an interim (six months) and full year basis, Standard Bank needs to submit quarterly financial information to the Industrial and Commercial Bank of China (ICBC), its single largest shareholder with a significant minority stake. The good news is that this gives all of us more regular information on the performance of Standard Bank than would otherwise be the case.

The movement in shareholders’ equity for the quarter doesn’t tell us much, as the ordinary dividend was paid in this period and hence total equity actually reduced over the quarter. It’s far more valuable to look at the commentary regarding headline earnings, which increased by 10% year-on-year.

Another important nugget is that the Africa Regions contributed over 40% of headline earnings in the quarter. Despite all the macroeconomic noise at the moment, things are clearly holding up for them.

An even clearer sign of this resilience is that 2025 guidance is unchanged at the moment despite the macroeconomic risks. That’s certainly a bold call.

Is the Karo Project at Tharisa offering a sufficient return? (JSE: THA)

The PGM market is in a tough space right now

If you enjoy digging into the particularly technical elements of mining (and if you understand them), then Tharisa releasing the Competent Persons’ Report on the Karo Platinum project will be of interest. Tharisa owns 65.59% in Karo Platinum, so they control this asset and it is important to the overall story. The report is a 321 page monster that you’ll find here.

Most of the report will only make sense to mining experts. Even the executive summary is a complicated read! Luckily, there are some very important points to highlight from a financial perspective.

For example, it’s important to know that commissioning is expected in Q4 2026. Also, of the total expected capex of $475 million, there is still $338 million to be spent, so there’s a long way to go here.

But now we get to what really stuck out for me: the internal rate of return (IRR) in dollars for the project is 12.68%, which to be honest doesn’t sound like enough to be very appealing. The PGM market is in a difficult space with uncertain supply and demand dynamics going forwards and this is clearly not helping the economics.

And by the way, this is exactly how cyclical industries sort themselves out – the returns on new projects become tight enough that investment in capacity slows down, leading to a shortfall in supply when demand finally picks up. The trouble is that at the moment, the question about demand is if rather than when.

Texton is sending a big chunk of cash back to shareholders (JSE: TEX)

I have to wonder why this isn’t in the form of share buybacks

Texton Property Fund didn’t declare an interim dividend for the six months to December 2024. They didn’t do it in the interim period either, in case you’re wondering. Instead, they’ve declared a special dividend of 20.13 cents per share for the latest interim period. To give you context, the share price is currently trading at R3.50.

The even more important context is that the net asset value (NAV) per share was R6.44 as at the end of December 2024, so the current share price represents a substantial discount to NAV. With excess cash on the balance sheet, this creates the perfect opportunity for substantial share buybacks at the current price, thereby unlocking returns for the shareholders that choose to stick around.

The good news is that Texton is returning capital of 79.87 cents per share to its shareholders, which is a more disciplined decision than allocating the capital in a way that doesn’t make sense. The bad news is that this won’t do anything to improve the discount to NAV – if anything, it might make it worse, as less of the NAV than before will be attributable to cash rather than other investments.

If you want to deal with the discount to NAV, you have to reduce the number of shares in issue and do it at a price that is lucrative – effectively, this means the company is investing in itself at a discount to NAV! Simply handing back the cash to each shareholder proportionately achieves very little.

Nibbles:

  • Director dealings:
    • An associate of a non-executive director of Sun International (JSE: SUI) bought shares worth R9.8 million.
    • The CEO of Ascendis (JSE: ASC) and Calibre Investment Holdings (an associate of a director) each bought shares worth R143k i.e. the total trade was worth R286k.
    • A director of York Timber (JSE: YRK) bought shares worth almost R20k.
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