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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

South32 has entered into a binding agreement with a subsidiary of CoreX Holdings to disinvest its Cerro Matoso open-cut mine and smelter located in Córdoba Columbia. The transaction follows a strategic review by South32 in response to structural changes in the nickel market. CoreX will make future cash payments to South32 of up to US$100 million for the acquisition which is expected to complete later this year.

Stefanutti Stocks (SSH) has terminated the 2022 agreement it signed with Mauritian CCG-Compass Consulting Group to sell its businesses in Mozambique and Mauritius. As part of the restructuring plan agreed to by the Board and lenders, SSH has entered into an agreement with East Africa Enterprises, a privately owned business established in the Dubai Multi Commodities Centre Authority. SSH will receive an aggregate of US$3,9 million for the businesses with $700,000 payable for the Mauritian entity and a total of $3,2 million for the Mozambique subsidiary. The proceeds, payable by 31 December 2025, will be used to reduce the current funding facilities. The deal is categorised as a Category 2 transaction.

In a move that will enable Southern African Clothing and Textile Workers’ Union (SACTWU) to increase its investment in property and generate more regular cash flow, Hosken Consolidated Investments (HCI), through its subsidiary Squirewood Investments 64, will undertake two related party transactions. HCI will repurchase 1 million of its own shares from SACTWU for R144.1 million, at a price of R131 per share, representing c.1.3% of HIC’s issued share capital. Simultaneously, SACTWU will acquire three properties from HCI for R549,5 million. The properties are Gallagher Estate Holdings, HCI Rand Daily Mail and HCI Solly Sachs House. The transactions will reduce HCI’s share capital and consolidates its ownership structure.

This week, the Competition Commission reached an agreement with Vodacom and Remgro on revised conditions which will see the competition concerns by the Commission remedied. The merger of the fibre businesses was announced in November 2021 whereby Vodacom would take 30% stake in Maziv valued at R9 billon, with the option to increase the shareholding by 40%. The matter will now proceed to the Competition Appeal Court on an unopposed basis.

In its latest update, Primary Health Properties plc (PHP) says it has received valid acceptances for c.1.14 of Assura shares under the revised offer. Assura shareholders have until 12 August 2025 to accept the revised offer.

According to Bloomberg, Glencore is to sell its struggling copper refinery in the Philippines for an undisclosed sum. The refinery was placed on care and maintenance earlier this year. The purchaser of Philippine Associated Smelting and Refining (Pasar) is the local Villar family, with significant stakes in the sectors of construction, property and retail.

Unlisted Companies

NTT Data, the Japanese multinational headquartered in Tokyo, will dispose of local digital solutions provider, Britehouse Mobility, in a management-led buyout. Following the deal the company will re-brand to Britehouse and will operate as a fully independent company continuing to provide solutions specialising in the development and integration of customised platforms, products, and consulting services. Financial details were undisclosed.

Sub-Saharan African private equity fund manager, Phatisa, has exited its investment in Deltamune, a South African-based vaccine manufacturer. Acquired in 2022 by the Phatisa Food Fund 2, Deltamune has scaled its footprint into three new markets, broadened its product portfolio and deepened its distribution capabilities. In the next phase under Vaxxinova International’s stewardship, both companies expect to accelerate market access across Africa by combining Deltamune’s customer base and diagnostic strengths with Vaxxinova’s global R&D and product pipeline.

Local fintech startup Stitch has acquired digital payments company Efficacy Payments. The acquisition is the second transaction for Stitch in the past six months, following the acquisition of ExitPay earlier this year. The deal will enable Stitch to offer card acquiring services directly to merchants as a Designated Clearing System Participant, providing more seamless and cost-effective transactions. Financial details were not disclosed.

Global investment firm Carlyle will, through its sub-Saharan Africa Fund, dispose of Safety SA, a local independent TICT platform serving Africa and the Middle East and focused on food and workplace safety. Safety SA, acquired by Carlyle in 2018 will now be acquired by Centre Testing International Group, a third-party testing, inspection and certification company based in China. Financial details were not disclosed.

Pinewood Technologies Group PLC, a pure-play cloud-based software business providing innovative retail solutions to the automotive industry, will acquire, via its wholly-owned South African subsidiary, key assets such as customer contracts relating to the software-as-a-service business offering known as the Pinewood Dealer Management System from certain entities within the Motify Group for a total cash consideration of £2,5 million. The proposed acquisition will enable Pinewood.AI to fully control its sales and customer service functions in its markets in Southern Africa.

ONE Property Holdings, a boutique real estate brokerage firm catering to the high end and luxury real estate markets in South Africa, has transferred six established retail shopping centres to Enyuka Prop Holdings, a dedicated retail property fund co-owned by ONE Property, Mpande Property Fund and Trinitas Private Equity. The transaction increases the fund’s gross asset value from R1,8 billion to R3,5 billion making it a significant player in the unlisted retail real estate funds. The transaction was enabled by R2,1 billion in debt financing from a syndicate of financial institutions.

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

enX has declared a special distribution of R1.30 to shareholders, its second this year. In March, the company paid a special distribution of R1.55 from proceeds of sale of Centlube, Zestcor and Ingwe.

MTN Zakhele Futhi has approved a gross cash distribution to shareholders by way of a return of contributed tax capital from income reserves of R20.00 per share. The distribution of c.R2,47 billion will be made on 28 July 2025.

Orion Minerals has announced its intention to raise A$9,8 million, via the issue of $5,8 million worth of new shares. New shares valued at $3,3 million will be placed with select investors while a further $0,5 million would go to Tarney Holdings, with the remaining $2,1 million worth of new shares taken up by Ratel Growth. The company also proposes to offer a share purchase plan to existing shareholders of Orion to increase their stake in the company by up to $30,000, in a bid to raise up to $4 million. The capital raised will be used to fund working capital to support the Prieska Copper Zinc Mine and Okiep Copper Project developments.

The JSE has advised that the listing of Rebosis Property Fund will be removed from the bourse on 21 July 2025 following the failure by the company to remedy the various non-compliances since its suspension in August 2022. Shareholders are warned that they will remain invested in an unlisted company with the last day to trade (off-market) being 15 July 2025.

This week the following companies announced the repurchase of shares:

In May 2025 Tharisa plc announced it would undertake a repurchase programme of up to US$5 million. Shares have been trading at a significant discount, having been negatively impacted by the global commodity pricing environment, geo-political events and market volatility. Over the period 27 June to 4 July 2025, the company repurchased 75,505 shares at an average price of R20.7391 on the JSE and 315,453 shares at 86 pence per share on the LSE.

Glencore plc will undertake a further share buy-back programme to acquire shares of an aggregate value of up to US$1 billion. The shares will be repurchased on the LSE, BATS, Chi-X and Aquis exchanges and is expected to be completed in February 2026. This week 2,700,000 shares were repurchased at an average price of £3.01 per share for an aggregate £8,13 million.

Pan African Resources has commenced the share buyback programme announced in early June 2025. The programme will take place on the AIM Market of the LSE and the JSE with c.R200 million (c.£8,2 million) to be purchased across both exchanges. This week 1,183,418 shares were repurchased at an average price of 48 pence per share for an aggregate £650,973.

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 204,098 shares at an average price per share of 294 pence for an aggregate £599,887.

In May 2025, British American Tobacco plc extended its share buyback programme by a further £200 million, taking the total amount to be repurchased by 31 December 2025 to £1,1 billion. The extended programme is to be funded using the net proceeds of the block trade of shares in ITC to institutional investors. This week the company repurchased a further 714,678 shares at an average price of £35.52 per share for an aggregate £22,41 million.

During the period 30 June to 4 July 2025, Prosus repurchased a further 2,272,998 Prosus shares for an aggregate €106,58 million and Naspers, a further 206,733 Naspers shares for a total consideration of R1,13 billion.

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

Development Partners International and some co-investors, have signed a binding agreement to acquire a minority stake in Egyptian healthcare group Alameda Healthcare. The deal is valued at US$190 million. The funding will be used for expansion within Egypt as well as across the Gulf Cooperation Council region. Established in 1999, Alameda Healthcare operates a range of services across the healthcare sector.

Nigerian crypto startup Roqqu has acquired Fitaa, another crypto exchange with operations in Nigeria and Kenya. The financial terms of the all-cash deal were not disclosed. The deal marks Roqqu’s entry into the East Africa digital asset market.

Nawy, an Egyptian proptech, has acquired a majority stake in Dubai-based SmartCrowd, a DFSA-regulated platform that enables fractional property investment in the region. The expansion follows Nawy’s recent US$52 million Series A fundraise in May. Earlier this year, Nawy acquired asset management and home finishing startup ROA, relaunching it as Nawy Unlocked.

Equatorial Coca-Cola Bottling Company (ECCBC) and Coca-Cola Beverages Africa (CCBA) have reached an agreement which will see ECCBC acquire Voltic (GH) Limited and West African Refreshments Limited (WARL). Voltic is a subsidiary of CCBA and WARL is a subsidiary of CCBA and of The Coca-Cola Company (TCCC). Financial terms were not disclosed.

Guaranty Trust Holding Company began trading on the London Stock Exchange on 9 July 2025. The company cancelled its GDR’s listing and concurrently launched a US$105 million equity offering at a reference price of ₦70.00 each.

South African headquartered Stefanutti Stocks (SSH) has terminated the 2022 agreement it signed with Mauritian CCG-Compass Consulting Group to sell its businesses in Mozambique and Mauritius. As part of the restructuring plan agreed to by the Board and lenders, SSH has entered into an agreement with East Africa Enterprises, a privately owned business established in the Dubai Multi Commodities Centre Authority. SSH will receive an aggregate of US$3,9 million for the businesses with $700,000 payable for the Mauritian entity and a total of $3,2 million for the Mozambique subsidiary. The proceeds, payable by 31 December 2025, will be used to reduce the current funding facilities.

Chariot Corporation announced it has entered into a binding share sale agreement to acquire a 66.7% interest in a portfolio of Nigerian hard-rock lithium projects from Continental Lithium. The portfolio comprises four project clusters—Fonlo, Gbugbu, Iganna, and Saki—located across Nigeria’s Oyo and Kwara States, and includes eight Exploration Licences and two SmallScale Mining Leases (SSMLs). These licences will be transferred to a newly established joint venture entity, C&C Minerals, which will be 66.7% owned and controlled by Chariot. Continental will hold the remaining 33.3% interest. Chariot will make a total cash payment of US$1,5 million and issue 42 million shares in consideration.

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

The evolving landscape of South African financial services M&A

Calvin Chellan
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The evolving landscape of South African financial services M&A

The South African financial services sector is undergoing a structural realignment. Increased competition, margin compression, rising compliance costs, digital disruption, and shifts in capital allocation are forcing incumbents to rethink their business models. In this context, M&A has become a strategic tool not just to achieve scale, but to reposition portfolios, unlock capital efficiency, and acquire capabilities that cannot be built in-house at speed.

Over the past year, RMB Corporate Finance has advised on a number of high-impact transactions that exemplify this strategic pivot. While the various deals have different specifics, they collectively signal a sector in motion. As M&A activity intensifies, we see five themes shaping financial services transactions in the current market and how they are being structured, priced and executed:

Scarcity of quality assets driving premiums

The supply of high-quality, scalable financial services assets remains limited. Businesses with robust regulatory and compliance track records, strong distribution channels and resilient earnings are commanding premium valuations. With multiple bidders circling a limited universe of quality assets, competitive tension is high, and sellers with a clearly articulated growth story, defined upside potential and regulatory preparedness are seeing meaningful valuation uplifts. On the other side, buyers are increasingly differentiating on speed, regulatory readiness and integration capability.

Strategic partnerships on the rise and sometimes the preferred growth plan

Firms are increasingly looking beyond traditional M&A to build partnerships, especially with players in telecoms, retail and fintech. These alliances are helping to broaden distribution, reach underserved segments, and tap into new tech capabilities. Cross-border joint ventures are also gaining momentum to enter new markets without taking on the full cost and risk of acquisition. The ability to structure win-win partnerships, blending regulatory clarity with customer access, is fast becoming a strategic differentiator.

Regulatory considerations front and centre

The regulatory environment has become a central pillar in deal strategy. Authorities are playing a more active role in transaction approvals, with increased focus on competition, financial stability, transformation and consumer outcomes. As a result, early and proactive regulatory engagement is now a critical determinant of deal feasibility and timeline certainty. Regulatory strategy is being embedded earlier in transaction planning, rather than treated as a down-stream approval process.

Capital recycling driving deal flow

With capital frameworks tightening and return thresholds rising, institutions are increasingly recycling capital to fund growth. Excess capital or proceeds from the disposal of non-core assets or legacy operations are being redeployed into higher-growth or capital-light businesses. At the same time, buyers are looking for acquisitions that deliver capital uplift, whether through balance sheet efficiency, margin accretion or earnings diversification.

This capital-aware approach is influencing both deal appetite and transaction structuring. Boards are placing more weight on capital impact and post-deal metrics, and the ability to deliver strategic fit and capital efficiency is now central to deal approval.

Due diligence under pressure

The technical complexity of financial services assets, especially in areas like compliance, technology integration and regulated activities, means execution risk is real. Buyers are under pressure to run diligence in parallel, not sequentially, and to get to conviction quickly. Delays in surfacing key issues are leading to pricing uncertainty or missed opportunities. Successful acquirers are front-loading third-party diligence, building execution muscle internally, and using deep sector insight to filter risk early. In a market where speed often equals certainty, the ability to transact decisively has become a competitive advantage. Delay in confirming key risks or value drivers materially increases the risk of missed windows or pricing renegotiations.

Looking ahead

M&A will remain a central lever for strategic repositioning in South Africa’s financial services sector. Regional banks and insurers will continue to look outward, while domestic players will focus on refining business models and rebalancing portfolios in line with capital efficiency and regulatory direction. The next wave of successful deals will be those that combine strategic clarity, capital discipline and regulatory foresight.

Calvin Chellan is a Corporate Finance Transactor | RMB

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

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

Ghost Bites (MAS | Renergen | Stefanutti Stocks | Tharisa)

The Finance Ghost
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Ghost Bites (MAS | Renergen | Stefanutti Stocks | Tharisa)

A group of asset managers also call a special shareholders meeting at MAS (JSE: MAS)

And still Hyprop is nowhere to be seen

The interesting corporate finance games at MAS continue.

With Prime Kapital having called a shareholders meeting that will be held this Friday (11th July), a group of asset managers (Meago / Sesfikile Capital / Ninety One / MandG / Catalyst / Eskom Pension Fund / Stanlib / Mazi Capital / Momentum) have now done the same thing. Collectively, they hold in excess of 15% of the voting rights in the company, hence they can call such a meeting (just like Prime Kapital did). They make it clear that they are not acting as concert parties here.

While Prime Kapital is looking for shareholders to support a value unlock through an orderly sale of assets by the fund, these investment managers are worried about something else: corporate governance. They feel that the MAS board has been sitting on the fence, being a “conduit to market for dissemination of communications received by it” – a rather spicy but pretty accurate statement.

They don’t like the fact that Mihail Vasilescu is a director of MAS, as he has interests in Prime Kapital. They are also concerned about the perceived independence of Dan Pascariu, giving the long relationship with key players at Prime Kapital. They want both Vasilescu and Pascariu to leave the board, while proposing four candidates to be appointed to the board.

Another bone of contention is alleged poor disclosure around the joint venture agreement, the summary of which only recently came to light. The shareholders are specifically irritated by the development margin and the fixed dividend, terms that change the economics of the joint venture vs. how they originally understood it. There’s also an allegation that the joint venture made investments in listed securities at least once, something that wasn’t disclosed. Of course, the joint venture also bought many MAS shares (which is how we got here in the first place), suggesting a wider investment mandate than the investment community initially understood.

The most serious allegation, in my opinion, is the lack of disclosure of obviously critical terms in the joint venture. That’s going to be difficult for the board to defend.

There are a lot of questions being posed to the board. The shareholders have suggested that a board committee be established with the authority to respond to these queries. They have also proposed resolutions to remove Vasilescu and Pascariu from the board.

And…drumroll please…here are the four names of directors they have put forward for appointment: Des de Beer (one of the best-known names in property – and of course, a regular buyer of Lighthouse shares, as Ghost Mail readers know), Robert Emslie (highly experienced director with banking credentials), Sundeep Naran (also a strong ex-banking background, particularly in investment banking) and Stephen Delport (founder of Lighthouse Properties and its ex-CEO).

The troops are being called in, that’s for sure. All eyes now turn to the shareholders meeting on Friday and how that vote ends up going.

At this stage, it feels like Hyprop will be sitting on the blank cheque that the market somehow gave them for at least a few months before any kind of offer becomes viable. As a shareholder in Hyprop, that opportunistic capital raise and the related cash drag continues to irritate me.

Never a dull moment at Renergen (JSE: REN)

Mahlako Gas Energy wants their shares in Tetra4 to be repurchased

Just when you thought it was safe to go outside and believe that the weird stuff was over at Renergen, here’s something fresh to consider. Thankfully, it doesn’t appear to have any impact on the deal with ASP Isotopes, so the market hasn’t panicked. Still, there’s another legal distraction for Renergen at a time when they really need to be focusing on getting helium out of the ground.

The issue relates to Mahlako Gas Energy exercising a put option in relation to its stake in Tetra4, the Renergen subsidiary that houses the South African assets (and hence the only subsidiary that matters at the moment). Although the announcement is light on specifics, Mahlako Gas Energy believes that a put option event has occurred and that this entitles them to exercise the option. Renergen disputes this of course. On top of that, they even dispute whether the option transaction agreement (to which they are presumably a party) validly came into existence!

Sigh. It’s never boring at Renergen, that’s for sure.

Whatever the outcome here, it won’t be a quick process. There are dispute resolution mechanisms in place and if this does go to court, it will no doubt take years. Renergen won’t want to part with any cash to buy out a shareholder at this stage, unless it’s at a price so favourable that it wouldn’t have made sense anyway for the put option to be exercised by said shareholder.

Stefanutti Stocks enters into a new deal to sell the Mozambique and Mauritius subsidiaries (JSE: SSK)

The 2022 deal has been terminated

For a long time now, we’ve been reading updates from Stefanutti Stocks about delays in the disposal of SS – Construções (Moçambique), Limitada (SS Mozambique) and Stefanutti Stocks Construction in Mauritius (SS Construction). That deal is now dead. The good news is that there’s a deal to replace it.

The counterparty is East Africa Enterprises, an entity incorporated by the Dubai Multi Commodities Centre Authority. In other words, this is investment from the Middle East in Africa. Stefanutti Stocks will sell SS Construction for $700k, with the price payable by the end of December 2025. SS Mozambique will be sold for a total of $3.2 million, also payable by the end of December 2025. There’s some other cleaning up of balances as well, but that’s the meat of the deal from an equity perspective.

The repayments of loans is more interesting, with the purchaser extending $3.5 million to SS Mozambique for working capital purposes and further loans of $6.1 million in various tranches before the end of December. The $6.1 million is for the purposes of repaying a loan of R113.2 million from Stefanutti Stocks.

Although you would imagine that this is very good news (even though there are various conditions to the deal), the share price closed flat for the day! The joys of illiquidity.

PGM and chrome production up sequentially at Tharisa (JSE: THA)

It’s platinum’s time to shine – and they need to get the stuff out the ground

Tharisa’s share price is up 28% year-to-date, boosted by the recent platinum rally. As there is significant chrome exposure as well, they haven’t flown to the moon quite like some of the pure-play options in platinum (for context, Northam Platinum has nearly doubled). Diversification reduces risk and also tempers overall potential returns. Such is the world of finance.

Like all mining companies, the focus at Tharisa is on getting the commodities out of the ground. PGM production increased 6.2% quarter-on-quarter (i.e. Q3 vs. Q2 or what is referred to as a sequential view), while chrome was up 3.9%.

The recent rally in the sector can only be helping with discussions in the market around the funding of the Karo Platinum project. Although it’s extremely difficult to forecast long-term prices and thus the expected returns on such a project, it’s certainly even harder to convince investors to care about exploration and development when commodity prices are depressed.

This apathy is precisely why those prices eventually rally, based on lack of supply and an uptick in demand.

Speaking of development, it’s been a quarter of significant cash outflow at the group. Net cash is down from $79.3 million to $29.4 million based on project and working capital outflows.

Unfortunately, due to various production issues this year, they are still running below full-year guidance. They’ve taken 5% off the lower end of guidance for the year. It’s frustrating for investors in terms of what might have been, but that’s also why a diversified basket of miners is usually a lot smarter than just owning one. There are too many unpredictable elements in mining – including the elements themselves, as rainfall is a major factor!

Nibbles:

  • Director dealings:
    • In what has to go down as one of the smallest stock purchases by Christo Wiese, he bought R27.8k worth of shares in Brait (JSE: BAT) through Titan Premier Investments. They’ve must’ve found some coins in the couch.
  • enX (JSE: ENX) has declared a chunky special dividend of R1.30 per share. With the share price closing at R4.79 on Wednesday, that’s a significant portion of the total market cap. This comes after a number of divestments and what is now a cash balance far in excess of requirements. As one hopes to see in terms of capital allocation discipline, they are returning the cash to shareholders instead of chasing after unnecessary or marginal deals.
  • There’s a change in management at Nedbank (JSE: NED), with Andiswa Bata appointed as Managing Executive of Nedbank Business and Commercial Banking (BCB). I must say, this structure makes much more sense to me than the old structure that had various people falling over one other to service smaller business clients. The BCB cluster will look after SME, commercial and what they call mid-corp clients, with the much larger clients being serviced on the Corporate and Investment Banking (CIB) side. Bata was most recently the CEO of the Business segment at FNB, so this is a solid external appointment. Nedbank has been bringing in a lot of new blood and fresh ideas from competing banks, not least of all Jason Quinn in the CEO role.
  • Here’s something you won’t see every day: after Metrofile (JSE: MFL) announced that Bradley Swanepoel would be coming in as the new CFO, they’ve now backtracked on that. The parties have “mutually agreed” (I’m sure it was exactly 50-50 – not) that Swanepoel will no longer be appointed as CFO. These things are NEVER truly mutual. For whatever reason, one of the parties surely had a change of heart and then the conversations began about what to do. Shivan Mansing will continue in the dual role of group CFO and Managing Director of Metrofile Records Management South Africa for now.
  • Super Group (JSE: SPG) announced that S&P has affirmed the company’s credit ratings as zaAAA (long-term) and zaA-1+ (short-term) after the disposal of SG Fleet Group. This is important for keeping the company’s borrowing costs at appealing levels.

Ghost Bites (Orion Minerals | Prosus | Vodacom – Remgro)

The Finance Ghost
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Ghost Bites (Orion Minerals | Prosus | Vodacom – Remgro)

Orion Minerals raises at least R37 million in cash as part of a larger equity raise (JSE: ORN)

If the share purchase plan goes well, it could be a lot higher

Orion Minerals has announced the issue of 522 million shares at R0.13 per share (roughly the current traded price), thereby raising around R67 million in equity.

They’ve managed this by achieving commitments from sophisticated and professional investors in the market who signed up for R37 million, with this amount flowing into the group as a cash raise. To further improve the balance sheet, entities related to current and prior management have agreed to convert R30 million in loans into shares.

As the icing on the cake, Orion will offer a share purchase plan to shareholders, giving them the opportunity to subscribe for up to R355k in shares per shareholder, with a potential raise of up to R46 million. I appreciate the commitment that Orion has shown to retail investors here, as most companies just raise from institutions in fancy boardroom deals and leave the average shareholder out in the cold, aside from rare examples where rights issues are necessary. This combination of an institutional raise and a share purchase plan is exactly what companies should always do.

Please note that the share purchase plan is only available to shareholders who were already on the register as at 7 July.

Orion will use the proceeds to fund the development at Prieska Copper Zinc Mine and Okiep Copper Project, as well as the usual catch-all of “general working capital purposes” at the group.

Prosus is having no trouble in attracting capital (JSE: PRX)

This is what happens when a group stops eating cash

The major highlight of the recent financial performance at Prosus is that they are no longer free cash flow negative in their operations excluding Tencent. If you know the history of the group, you’ll know that this is a big deal.

This does wonders for the balance sheet. Although Prosus has plenty of long-dated debt that doesn’t need to be refinanced yet, having strong ongoing support from the debt market is important for a group of this size.

Prosus has priced €750 million in notes due 2035. This will refinance the notes that matured in 2025, as well as €500 million worth of notes maturing in January 2026. The bonds were priced at 4.343% and were more than four times oversubscribed by investors, so there’s no shortage of interest from investors wanting to earn interest from Prosus.

Prosus is rated BBB with a stable outlook by S&P and Baa2 with a stable outlook by Moody’s. This means that the bonds are investment grade with a moderate level of risk. As Prosus keeps derisking its business, its credit rating should hopefully improve and the cost of borrowing will come down. I think we are some way off that, but the direction of travel is clear.

Finally, the Dark Fibre deal can step into the light for Vodacom and Remgro (JSE: VOD | JSE: REM)

The negotiations with the Competition Commission have paid off

After many, many, many extensions to the long-stop date for the transaction that would see Vodacom and Remgro combine their fibre assets into an exciting new venture, there’s finally success.

The Competition Commission initially blocked the deal in a move that received no shortage of valid criticism. Since then, the parties have been trying to agree a set of transaction conditions that would please the Commission. I look forward to those conditions coming to light, as I have my suspicions that the term “public interest” is working very hard once more to mean Black Ownership under B-BBEE rules rather than stuff like access to internet in low income areas. Perhaps I’ll be pleasantly surprised, but I doubt it. For whatever reason, the Competition Commission sees itself as the B-BBEE implementation arm of government.

With this deal now going to the Competition Appeals Court on an unopposed basis, Vodacom and Remgro will soon have the fibre assets of CIVH (including Vumatel and Dark Fibre) and of Vodacom in the same entity, namely Maziv. Vodacom will have a 30% stake in that entity.

There isn’t much growth in traditional cellphone services in South Africa, so this fibre deal is very important for Vodacom in particular.

Nibbles:

  • Director dealings:
    • In addition to a reshuffling of the structure through which he holds his shares, a director of a major subsidiary of PBT Group (JSE: PBG) bought additional shares worth R36k.
  • Datatec (JSE: DTC) is busy with a scrip dividend alternative to the cash dividend of 200 cents per share. If shareholders want, they can elect to receive 3.21027 shares for each Datatec share held. This is calculated based on the 30-day VWAP, less the dividend.
  • Castleview (JSE: CVW) is also busy with a dividend reinvestment alternative, but they’ve decided to price it at R9.53540, which is the net asset value (NAV) per share. The stock never trades as it is so tightly held, but the last available price was R8.20. As it’s impossible to buy more shares on the market, any investors looking to increase their stake will need to pay the NAV per share.

Ghost Bites (Assura – Primary Health Properties | South32)

The Finance Ghost
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Ghost Bites (Assura – Primary Health Properties | South32)

Assura shareholders aren’t exactly rushing to accept the Primary Health Properties offer (JSE: AHR | JSE: PHP)

Perhaps I was right about the cash offer being far more attractive?

The Assura – Primary Health Properties deal is far from done. I wasn’t surprised at all to see strong support from the Primary Health shareholders, as it’s a good deal for them. As for Assura shareholders, they seem to be a lot more cautious in signing up for a merger. Again, I don’t blame them. I genuinely think that the Assura board backed the wrong deal here, as cash alternatives are just so much cleaner – even if the price is slightly lower.

There’s a long way to go still, with the offer open until 12 August. As things stand, valid acceptances for just 1.14% of Assura shares have been received by Primary Health. Perhaps there will be a surge in acceptances. And perhaps there won’t…

To help with trying to convince Assura shareholders to say yes, Primary Health released a trading and financial update for the six months to June 2025. The update takes the opportunity to remind Assura shareholders that the deal would create a UK REIT with a combined portfolio of roughly £6 billion of assets, with the tenants generally being in the public sector in the UK. The public sector vs. private sector debate has been a feature of this deal, with the plan being for the merged entity to have 80% to 90% government-backed income, while the private sector assets are sold off into a joint venture.

As for the numbers, the six months to June 2025 saw a 3.1% increase in net rental income and a 2.9% increase in the dividend per share. When you’re dealing with a risk profile like government tenants in the UK, you’re looking for dependability of income rather than growth. This also allows them to run at quite a spicy loan-to-value ratio, currently at 48.6%.

I’m really looking forward to seeing how the latter stages of the offer period play out. It’s been a fascinating deal to follow.

South32 offloads their nickel asset in Colombia (JSE: S32)

And they are happy to just get paid something in the future

The nickel market hasn’t been a happy place. This is a classic situation of oversupply, with too much investment in this metal in anticipation of electric vehicle demand that hasn’t materialised. This results in depressed nickel prices and a reduction in supply until equilibrium is reached.

South32 isn’t hanging around for that, with a decision to sell Cerro Matoso in Colombia to CoreX Holding. The upfront price is nominal, with South32 just happy to be rid of the current and future liabilities. There is an “agterskot” though (as we like to call it in South Africa), in the form of potential future payments of up to $100 million.

Up to $80 million relates to price-linked consideration based on future production and nickel prices, while up to $20 million is based on permitting milestones within the next five years for the Queresas & Porvenir North project.

Sometimes, you just need to walk away and cut your losses. South32 will have to recognise an impairment expense of $130 million as this asset is shifted off the balance sheet.

Nibbles:

  • Director dealings:
    • Sean Riskowitz has bought shares in Finbond (JSE: FGL) worth R433k.
  • MTN Zakhele Futhi (JSE: MTNZF) is in the process of being wound up and returning value to shareholders, all thanks to the recent strength in the MTN share price that gave them this opportunity. The latest step is the declaration of a special distribution by way of return of contributed tax capital of R20.00 per share.
  • Glencore (JSE: GLN) is commencing a share buyback programme of up to $1 billion, with a plan to complete this programme by February 2026. UBS in London has been appointed to manage the process. For context, much as that sounds very large and impressive, Glencore’s market cap is R955 billion. This programme is therefore roughly 2% of issued share capital.
  • Old Mutual (JSE: OMU) announced the appointment of Prabashni Moodley as the CEO of the new Life and Savings segment. Under this segment, you’ll find Personal Finance, Old Mutual Wealth Management, Old Mutual Corporate and the Mass and Foundation Cluster. Moodley has been with Old Mutual since 2002 and is currently the Management Director of Old Mutual Corporate. Will this new structure help Old Mutual close the gap to a peer like Sanlam? Over five years, Old Mutual is down 4% and Sanlam is up 43%!
  • Accelerate Property Fund (JSE: APF) has been granted an extension by the JSE for the issuing of the circular for the sale of Portside. The extension gives them until 31 July.
  • Trustco (JSE: TTO) still hasn’t released financials for the year ended August 2024. They are currently waiting for a ruling from the JSE, so there’s no indication of when they will finally be released.

UNLOCK THE STOCK: Attacq

The Finance Ghost
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UNLOCK THE STOCK: Attacq

Unlock the Stock is a platform designed to let retail investors experience life as a sell-side analyst. Corporate management teams give a presentation and then we open the floor to an interactive Q&A session, facilitated by the hosts.

We are grateful to the South African team from Lumi Global, who look after the webinar technology for us, as well as EasyEquities who have partnered with us to take these insights to a wider base of shareholders.

In the 57th edition of Unlock the Stock, Attacq returned to the platform to update us on the recent numbers and the latest strategic thinking. I co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.

Watch the recording here:

What 25 years as a market pioneer taught us about South African investing

Kingsley Williams, CIO at Satrix
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What 25 years as a market pioneer taught us about South African investing

A quarter-century ago, Satrix launched South Africa’s first exchange traded fund (ETF). We were inspired by a radical idea: make investing accessible, affordable and effective for everyone.

At the time, ETFs were still gaining ground globally. In South Africa, they were unheard of. But with support from the JSE and seed capital from Sanlam, we took the leap. Today, index investing is mainstream, but the journey to get here came with big lessons.

Here are five lessons that we think matter more than ever:

1. Indexation isn’t just ‘average’ – it often outperforms

When Satrix launched, the notion that you could track an index and still win seemed counterintuitive. But over time, the data tells a compelling story: net of fees, low-cost indexed strategies have consistently delivered above-average results, especially over long periods. For example, the Satrix All Share Index Fund A1 ranks third out of 24 unit trusts in the ASISA South African Equity General category that have maintained a 10-year track record to the end of April 2025, delivering an impressive, annualised return of 8.1%1. Furthermore, the Satrix 40 ETF, which was the genesis of the Satrix story, has delivered an even better performance at 9.0% p.a. over the last 10 years2.

Despite a slow start, South Africans are now moving in this direction. In 2024, index funds across all ASISA categories attracted over 87% of net new flows3. The shift to rules-based investing is accelerating, not because it’s fashionable, but because the outcomes are better.

“We didn’t follow trends. We followed conviction. And now the market is catching up.”

2. Innovation only matters if it solves real problems

Being first doesn’t guarantee success. What matters is solving for what investors actually need.

That’s why we built local intellectual property, creating indices tailored to South Africa’s unique market structure – from high sector concentration to liquidity constraints. It’s also why we expanded beyond building blocks to full portfolio solutions, from our SmartCoreTM range to balanced funds.

Our early move into balanced funds brought an index-based approach to a space traditionally dominated by active management. Instead of trying to add value by tactically timing asset class exposures, we stuck to a well-considered strategic asset allocation based on thorough research and long-term conviction. Since its inception, the Satrix Balanced Index Fund A1 has been in the top quartile more than 70% of the time and outperformed the median more than 95% of the time on a rolling five-year basis, delivering one of the most consistent performance track records in the ASISA South African MA High Equity category4.

“We brought index thinking into multi-asset portfolios, giving investors more than just parts – we gave them outcomes.”

3. Scale can drive real financial inclusion

As our funds grew, so did our ability to cut costs. We passed those savings on. When the Satrix MSCI World Index Fund scaled, we converted it into a direct fund – reducing fees for everyone. The Satrix Nasdaq 100 ETF followed a similar path.

We call it the double dividend: scale lowers costs, which boosts net-of-fee returns.

“It’s not just about performance – it’s about performance that more people can afford to access.”

4. Bridging gaps makes markets more inclusive

For years, ETFs were the preserve of direct investors, wealth managers and investment professionals, while financial advisers leaned on unit trusts. That left a gap. By pushing ETF availability onto Linked Investment Service Provider (LISP) platforms, we opened up a new channel – one where advisers and their clients could access the benefits of indexing without changing platforms.

“We helped bridge the divide – and in doing so, widened the path to inclusion.”

5. Basics matter

Younger investors – Gen Z and Gen Alpha – are looking for cost effective and flexible investments without compromising returns. They want to be able to start small and not be penalised. That’s especially true in a country like South Africa, where affordability and unemployment are real challenges. That’s why convenient access, no minimums, a wide range of investment choice and compelling long-term returns remain our focus.

Looking ahead: the next chapter of access

Indexation is still gaining ground globally – and South Africa is no different. With 25 years of performance data now behind us, the case is stronger than ever.

As we move forward, we will keep expanding the options for people to access investments. This includes digital platforms, new investment strategies, and addressing use cases that we have not yet tackled. By leveraging fintech and promoting ongoing innovation, we aim to further reduce barriers that might discourage first-time investors.

Globally, we’re seeing indexation and investment innovation continue to grow, especially in the US, and increasingly in Europe. South Africa is on the same path. Now that local investors have 25 years of performance history, investors are increasingly seeing the same proof in the pudding.

Critics sometimes argue that index funds “guarantee underperformance” because they don’t offer any outperformance of the index after fees. But that’s the wrong question, as you can’t invest in an index itself. The right question is: how do funds tracking an index perform relative to any other fund available on the market? And over 10+ years, the data is clear – low-cost indexed strategies regularly outperform a significant majority of actively managed peers. That’s what matters.

This article was first published here

Sources:

1 Morningstar, as at 30 April 2025

2 Morningstar, as at 30 April 2025

3 Morningstar & Satrix, as at 31 December 2024

4 Morningstar & Satrix, as at 30 April 2025

Disclaimer:

*Satrix is a division of Sanlam Investment Management

Satrix Managers (RF) (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). The information above does not constitute financial advice in terms of FAIS. 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, 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 disclaim 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.

Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. With Unit Trusts and ETFs, the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index-tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document.  A fund of funds portfolio is a portfolio that invests in portfolios of collective investment schemes that levy their own charges, which could result in a higher fee structure for the fund of funds. International investments or investments in foreign securities could be accompanied by additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information.

For more information, visit https://satrix.co.za/products

Ghost Bites (HCI | MAS)

The Finance Ghost
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Ghost Bites (HCI | MAS)

HCI wants to sell Gallagher Estate and other properties to SACTWU, but it’s far from a vanilla deal (JSE: HCI)

Selling the properties is good in theory, but these terms are quite something

When I last wrote about HCI and its group companies in Ghost Bites, I pointed out a fundamental problem: the group’s most important cash cow is its gaming assets, and with the shift to online betting, casinos are producing less milk. To add to the pressure, HCI is investing in speculative plays like energy, which tend to be capital intensive with uncertain outcomes. This isn’t a great combination.

An obvious way to improve the balance sheet would be to sell off certain properties in the group that are sucking up capital and producing poor returns. For some reason, even in HCI subsidiary companies, there’s a love of holding unnecessary property assets. So, in theory, seeing a sale of assets like Gallagher Estate is positive. The bad news is that this disposal does absolutely nothing to improve HCI’s cash flow. In fact, it leads to a cash outflow.

How can that be? My read of it is that HCI has decided to solve the problems of the Southern African Clothing and Textile Workers’ Union (SACTWU) at the expense of other shareholders. Now, HCI’s history is firmly entrenched in the unions, so this shouldn’t come as a huge shock.

SACTWU currently holds 23.8% of HCI’s shares in issue. They aren’t managing to meet their financial obligations, so they keep selling HCI shares in the market, a situation that isn’t sustainable. There’s an argument to be made that this is an overhang on the HCI share price. I think it’s a weak rationale for a deal though, especially on these terms. Average daily value traded in HCI shares is below R10 million, so it would be difficult, but not impossible, for SACTWU to unlock that kind of value through on-market disposals.

Here’s part one of the deal: HCI (acting through an unlisted subsidiary called Squirewood Investments) will repurchase 1.1 million shares from SACTWU for R144.1 million at a price of R131 per HCI share. At the start of trade on the day of the announcement, the market price was R130.50 per share, so this is approximately the market price.

Yes, HCI with its balance sheet under pressure and with dicey core exposures will be parting with R144.1 million to buy its shares back at the market price, giving SACTWU a sweetheart deal of note to exit part of their position. Hmmm.

But what about the property disposals? Do those make up for it?

HCI will sell its shares and claims in Gallagher Estate, HCI Rand Daily Mail and HCI Solly Sachs House for SACTWU for R550 million. There will then be an agreement for Squirewood to purchase shares worth the same amount from SACTWU (once again at R131 per share). A cession agreement will essentially offset these amounts.

In other words, the R550 million doesn’t actually flow. HCI is repurchasing a ton of shares here and is offloading the properties. When all is said and done, SACTWU will hold 18.4% in HCI rather than the current 23.8%. Whether or not HCI would then look to dispose of the shares in the market or hold them as treasury shares is unclear.

Does this actually solve anything for SACTWU on a sustainable basis? The total value of the net assets is R510 million on the HCI balance sheet. As one of them is loss-making, they achieve net attributable income of just R5.5 million, which is an astonishingly bad return. It’s difficult to imagine that this makes such a difference to SACTWU.

Did you notice the price? It looks like SACTWU is paying a premium to the current net asset value on the properties, although this could just be because of an outdated valuation. Based on attributable net income though, the properties are either terribly mismanaged or just terrible, full stop.

Shareholders will have to approve this, with a special resolution required. SACTWU isn’t allowed to vote on the deal. I don’t personally like this deal and can’t see why HCI shareholders would rush to approve it, unless HCI has managed to sell the properties at an inflated price, with the balancing point being that HCI then needs to drip shares into the market to raise cash instead of SACTWU having to do that.

If shareholders believe that HCI’s shares are currently undervalued, then they will see this as a clever transaction that gives HCI flexibility down the line. Those with a more bearish take will be worried about the cash outflow at a time of weakness in the gaming industry, potentially creating further pressure for HCI down the line.

I can’t wait to read the independent expert report!

MAS makes the summary of the all-important joint venture agreement with PK available (JSE: MAS)

The “summary” is 17 pages long – and it delivers an important lesson

Webber Wentzel was appointed by MAS to summarise the joint venture agreement that is at the centre of a negotiation between MAS and Prime Kapital (PK). This is because the terms have come as a surprise to investors in terms of the difficulty that MAS is having in getting access to the cash in the joint venture. The summary is 17 pages long and is available here.

The joint venture was set up for development of property in Central and Eastern Europe, with PK appointed as the general partner of the joint venture. Importantly, there are reserved matters that require unanimous approval of the B ordinary shareholders (i.e. MAS and PK). When you see unanimous approval, be afraid. Be very afraid.

After all, joint control is just a different way of saying no control.

Ironically, MAS is actually better off for the unanimous approval requirement, as they only own 40% of the B ordinary shares despite having put in all the capital for the A preference shares. In other words, MAS signed up to put in far more capital than PK in the form of non-voting shares, while having very little in the way of ability to drive the direction of the joint venture due to a non-controlling stake in voting shares. From PK’s perspective, they have a controlling share of the voting shares, but this doesn’t amount to much due to the agreement.

My view on commercial agreements is that the risk capital should drive control. MAS should’ve had a controlling stake in the ordinary shares and there should’ve been some basic protections in place for PK, rather than the ability to veto dividends.

Let this be a lesson to anyone negotiating a deal where there’s an imbalance. I’ll reference that old wisdom: they who have the gold, make the rules. If you have the gold and you give someone else the power to stop you getting it, then you’re going to have a bad time.

Nibbles:

  • Director dealings:
    • A number of Dis-Chem (JSE: DCP) directors, including members of the founding family, sold shares worth R11.8 million in relation to various share awards. There’s one small sale that is referenced as being the taxable portion, so I assume that the rest is not just the taxable amount.
    • Sean Riskowitz bought shares in Finbond (JSE: FGL) worth R570k.
    • A director of a subsidiary of PBT Group (JSE: PBG) bought shares worth R36k.
  • As a reminder of how different the listing rules are in Australia vs. the JSE, Orion Minerals (JSE: ORN) has a halt in place on the Australian Stock Exchange (ASX) ahead of capital raising activities, but there’s no such halt in place on the JSE. The halt on the ASX will be lifted when Orion announces the results of the capital raise.
  • Vodacom (JSE: VOD) and Remgro (JSE: REM) have agreed to extend the longstop date for the fibre transaction to 18 July. With the Competition Appeal Court heading dates reserved for 22 to 24 July, that date will need to be extended again for the deal to stay alive. As we recently saw in the Sun International (JSE: SUI) – Peermont transaction, it’s not a foregone conclusion that parties will extend the date.
  • Burstone (JSE: BTN) announced that Jenna Sprenger will step down as CFO at the end of August 2025, after 12 years with the company. Myles Kritzinger, ex-CEO and CFO at Transcend Residential Property Fund, will take the CFO role at Burstone with effect from 1 September 2025.
  • After getting rid of their designated advisor, Mantengu Mining (JSE: MTU) has now appointed AcaciaCap Advisors to that role. In case anyone is keeping score, the share price is down 24% year-to-date and we still haven’t seen any concrete evidence of illegal behaviour in the market.
  • If you’re keeping an eye on the few remaining preference shares listed on the JSE, then be aware that Absa (JSE: ABG) is about to repurchase and delist its preference shares this month.
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