Wednesday, November 5, 2025
Subscribe
Home Blog Page 76

What ChatGPT can teach us about first mover disadvantage

Dominique Olivier
-
2
What ChatGPT can teach us about first mover disadvantage

Just because you macheted a new trail through the jungle, doesn’t guarantee you’ll be the first one to reach El Dorado. Sometimes, the same path to innovation is the one that makes it that much easier for your competitors to catch up with you.

Since its debut in 2022, ChatGPT has become the fastest-growing consumer app in internet history. Its parent company, OpenAI, went from zero to more than $1 billion in revenue last year – and that’s fast even by Silicon Valley standards. You would expect this to be the startup success story of the decade, if not the century. However, the tech company that has thrown half the world into panic and the other half into giddy excitement has yet to turn a profit. And while OpenAI’s numbers are still being inked in red, competitors are catching up fast.

The pros and cons of pioneering

You can think of a first mover in any industry as a sprinter who gets a head start in a race. By being the first to introduce a new product or service, they effectively start a lap ahead of all the other runners. Their early entrance gives them a chance to build a strong brand and loyal customer base before any competitors show up. It also gives them some breathing room to fine-tune their offering, and maybe even a chance to set the market price.

However, once a first mover gets going, competitors take off from their starting blocks, hoping to get into the slipstream of that success and snag a piece of the action. If the original pioneer has a big enough head start, a solid market share and dedicated customers, or the stamina to keep innovating, there’s a good chance that they can stay ahead of the pack. More often than not, they find themselves getting overtaken eventually.

In the rush to be the first, a company might cut corners or skip essential features just to launch quickly. If the initial product doesn’t hit the mark with consumers, competitors are then incentivised to take advantage by offering something that better meets customer needs. So, while the first mover takes on the heavy lifting and risks, later entrants can often swoop in with a polished product and win over the market.

They have the benefit of hindsight, even if it wasn’t their own.

The context: how ChatGPT is (and isn’t) making money

OpenAI started as a nonprofit, using around $130.5 million in donations to fund its research and development while committing to share its findings through open-source projects. But in 2019, the company shifted gears and restructured into a limited partner model, blending nonprofit and for-profit elements. They created a for-profit subsidiary that could issue equity and attract top talent, while employees working on profit-driven projects moved to this new entity.

This reorganisation allowed OpenAI to bring in venture capital, blending cutting-edge research with commercial ventures like ChatGPT subscriptions, aimed at making AI accessible and affordable. Importantly, the for-profit arm is bound to the nonprofit’s mission, with profits capped at 100 times any investment. The same nonprofit board continues to oversee all OpenAI activities.

The bulk of OpenAI’s revenue comes from licensing fees for its AI models and products. Pricing access is based on tokens, which represent the number of words generated. It also earns through partnerships, with Microsoft being the most notable partner. Microsoft invested $10 billion in 2023, pushing its total investment to $13 billion. This partnership helps OpenAI reach a broad customer base, offering API access to enterprises and developers alike. Microsoft uses OpenAI’s tech in its Bing search engine’s Copilot tool.

In just nine months post-launch, ChatGPT had been adopted by teams in over 80% of Fortune 500 companies, including big names like Block, Canva, Carlyle, The Estée Lauder Companies, PwC, and Zapier. To boost revenue further, OpenAI introduced ChatGPT Plus, a premium version of the chatbot priced at $20 per month, offering priority access to subscribers. Free users still have access, but only to older versions (like 3.5 instead of 4.0), which may experience downtimes during high demand.

OpenAI has raised a total of $13.5 billion over ten funding rounds, with investors like Thrive Capital, Founders Fund, Arrowshare Ventures, angel investor Thomas Witt, and E1 Ventures getting involved. The company also supports AI startups through its $100 million OpenAI Startup Fund, launched in May 2021, offering consulting and product commercialisation help.

It all sounds great on paper, but despite generating more than $1 billion in revenue in 2023, OpenAI hasn’t yet turned a profit. The development of ChatGPT-4 alone reportedly cost $540 million.

If OpenAI does reach profitability, Microsoft will first recover its investment with a 75% share of the profits and will then receive a 49% share up to $92 billion in profits. As of December 2023, OpenAI was in talks to raise new funding, potentially valuing the company at $100 billion, up from an $86 billion valuation earlier in the year. Co-founder Sam Altman is also exploring up to $7 billion in funding to invest in semiconductor infrastructure to support the AI industry’s growing needs.

Hurdles on the horizon

OpenAI may have been first out the gate, but whether or not it has the legs to stay in the lead remains to be seen.

1. An expensive lead

    Jumping into the game early comes with a hefty price tag. For OpenAI, creating ChatGPT meant pouring a ton of resources into research and development. This kind of investment can put a lot of pressure on a company, especially when competitors can simply mimic the technology at a fraction of the cost. The stats speak for themselves: various online sources suggests that it costs approximately 60% to 75% less to replicate an existing product than it does to create a new one. In the case of OpenAI, this means that even with substantial revenue, profitability remains a distant goal, given the massive upfront costs. Meanwhile, competitors like Copilot (created with OpenAI’s own technology) and Llama are free to innovate from a much smaller cost base.

    2. Regulations and other headaches

    One of OpenAI’s biggest challenges has been keeping up with and anticipating regulations around data privacy, AI ethics, and misuse of technology. As the first mover, they often face the brunt of regulatory scrutiny, making them the guinea pig for policymakers figuring out how to handle new tech (not to mention the recipient of multiple lawsuits). The rules aren’t always clear, and the stakes are high. A company in this position needs to move with extreme caution, often slowing down to ensure compliance, while competitors can watch and learn from their experience.

    3. Innovation fatigue is a real thing

    Continuously rolling out new versions like GPT-4 is exhilarating but also exhausting. It’s a relentless cycle of development and improvement to stay ahead. Keeping the excitement alive while managing expectations becomes a constant balancing act. While innovators have run a hard race already, competitors with fresher legs are able to execute on their ideas with greater speed and efficiency.

    4. Investor scepticism

    Securing funding as a first mover is often a challenging feat. Investors tend to be cautious with unproven innovations, opting instead for projects that have already demonstrated viability. OpenAI had to overcome this scepticism, convincing backers that their advanced AI technology was more than just a fleeting trend. And, truth be told, the full potential of their innovation is still being debated. Even with heavyweights like Microsoft on board, there’s no guarantee that future funding rounds for the next iteration of GPT will be smooth sailing. On the other end of the spectrum, competitors who have built on OpenAI’s foundational work might find it easier to attract investment, as the technology’s market acceptance has already been established.

    The danger for pioneers

    So, is there a lesson to be taken from the trials and tribulations of ChatGPT? Having done the research, I would say this: being recognised as a creative genius is nice, but for most businesses, making money is even nicer. Beware of the lure of pioneering – the world needs new ideas, sure, but how many of those are still around (remember that article on Stigler’s Law)? Far more profitable, in my opinion, to refine an existing idea based on consumer feedback than to risk it all on invention and still be overtaken.

    Perhaps the greater question, which I will leave unanswered, is why we remain motivated to keep creating new things, despite these clear risks. Maybe it’s because we know that between pioneering and profiteering, there’s only one that truly moves the world forward.

    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.

    Dominique can be reached on LinkedIn here.

    Ghost Bites (Curro | Mantengu Mining)

    The Finance Ghost
    -
    0
    Ghost Bites (Curro | Mantengu Mining)

    Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:

    Curro has finally recovered to 2020 levels – but not 2019 levels (JSE: COH)

    A trading statement for the six months to June has been released

    Curro has guided the market on earnings for the six months to June. When it comes through as a trading statement, you know that the percentage difference is at least 20%.

    In this case, the difference might be as high as that, but won’t quite reach that point based on the mid-point of guidance. For the six months to June, HEPS is expected to be between 10.9% and 21.3% higher.

    Curro has been operating in tough conditions in the past couple of years. A recap of HEPS over the past few interim periods shows that they have finally recovered to 2020 levels. They are still a long way off 2019 levels, a time before Covid caused much pain:

    • 30 June 2019: 50.0 cents
    • 30 June 2020: 38.7 cents
    • 30 June 2021: 19.4 cents
    • 30 June 2022: 27.5 cents
    • 30 June 2023: 34.6 cents
    • 30 June 2024: 38.4 cents – 42.0 cents

    It’s been a long slog for the company in the post-pandemic period, with equity capital raised along the way that has made it more difficult to recover earnings on a per-share basis. Here’s the share price over 5 years:

    Mantengu Mining’s Birca Copper deal is in serious doubt (JSE: MTU)

    At least lawyers will be making money here, even if nobody else will

    In May 2024, Mantengu Mining announced the acquisition of Birca Copper and Metals for just under R30 million. This is a high grade chrome ore business in the North West Province. The mining area is the subject of a mining right granted to a company called New Venture Mining Investment Holdings, which is in force until 2045.

    A prerequisite for the deal was for New Venture Mining to transfer the mining right to Birca Copper and Metals, otherwise Mantengu Mining would simply be walking into a potential disaster. There’s now high drama, with New Venture Mining claiming that Birca Copper and Metals has breached certain terms of their relationship and thus New Venture Mining is cancelling the mining right agreement with immediate effect.

    Naturally, this means that the Mantengu acquisition of Birca is dead, which would be fine if it wasn’t for how much effort has already gone into the deal. Mantengu is going to engage with New Venture Mining to try and find a workable solution. If they can’t, then the lawyers will have to work to cancel the acquisition agreement and restore Mantengu as near as possible to the status quo ante.

    In dealmaking, the golden rule is that no deal is ever complete until all conditions have been satisfied. The more complicated the deal, the higher the likelihood of disappointment.

    Little Bites:

    • Director dealings:
      • A non-executive director of Richemont (JSE: CFR) bought shares in the company worth R557k.
      • An associate of a director of Vukile Property Fund (JSE: VKE) bought shares in the company worth R247.5k.
      • A director of Visual International (JSE: VIS) has bought shares worth R33.4k.
      • A director of a major subsidiary of Stefanutti Stocks (JSE: SSK) bought shares worth R13k.
    • Although not a director dealing in the traditional sense, Capitec (JSE: CPI) announced that Michiel Le Roux entered into another hedging transaction via Kalander Finco. This is basically a structure that uses the shareholding in Capitec as a way to raise financing, with a hedge over the shares to protect the lender. These structures are nothing new for Le Roux and wealthy listed company founders in general. The latest tranche is a European option transaction with expiry dates of 3.34 years on average, with a put strike price of R2,497.55 and a call strike price of R4,477.00. The current Capitec share price is R2,815.
    • MC Mining (JSE: MCZ) announced what nobody ever wants to see: a loss-of-life incident at the Uitkomst Colliery. There was a fall of ground incident that is being investigated. The colliery has temporarily halted operations until further notice.
    • For whatever reason, there was a small error in the Sebata Holdings (JSE: SEB) headline loss per share for the year ended March 2024. Instead of a loss of 101.62 cents as published, it should’ve been 102.2 cents.
    • The applications filed by the liquidators of Constantia Insurance Company to provisionally wind-up Conduit Capital (JSE: CND) and wholly-owned subsidiary Conduit Ventures were dismissed by the Western Cape High Court with costs.
    • If you’re keeping your fingers on the pulse of the business rescue process at Tongaat Hulett (JSE: TON), then be aware that the monthly status reports for the various entities have been published here.

    Unlock the Stock: SA REIT focus with Keillen Ndlovu

    The Finance Ghost
    -
    0
    Unlock the Stock: SA REIT focus with Keillen Ndlovu

    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.

    In the 40th edition of Unlock the Stock, we took a different approach with the SA REIT Association by welcoming highly respected independent property analyst Keillen Ndlovu to the platform. He shared an excellent presentation on the sector and engaged in a vibrant Q&A. The Finance Ghost co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.

    Watch the recording here:

    Ghost Bites (AB InBev | ArcelorMittal | Capital & Regional | Mondi | Mpact | MTN Ghana)

    The Finance Ghost
    -
    0
    Ghost Bites (AB InBev | ArcelorMittal | Capital & Regional | Mondi | Mpact | MTN Ghana)

    Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:

    AB InBev expanded its EBITDA margin this quarter (JSE: ANH)

    Half-year results are now available

    AB InBev released results for the second quarter, which means we have half-year results available as well. For both the second quarter and the six months, revenue was up by 2.7%. Volumes dipped, so it was pricing that took this into the green. This also explains why EBITDA margins have improved, as pricing power is important for protecting and improving margins.

    For the half year, normalised EBITDA margin expanded by 165 basis points to 34.4%. The momentum over the period was strong, as second quarter margin was up 236 basis points to 34.6%. For the half, normalised EBITDA was up 7.8%.

    Underlying earnings per share for the half improved by 21.2% to $1.66. Diluted HEPS was up 33.7% to $1.31.

    Net debt to normalised EBITDA was 3.42x, which is an improvement from 3.70x a year ago but slightly worse than 3.38x as at 31 December 2023.

    Looking ahead, the expectation for the full year result is for EBITDA growth to be in line with the medium-term outlook of 4% to 8%. That’s a very wide range, suggesting that they aren’t confident enough at this point to give more specific guidance. So far, so good at least in terms of hitting the top of that range for the first half.

    Steel yourself for these ArcelorMittal numbers (JSE: ACL)

    Losses are much worse than in the comparative period

    ArcelorMittal has released numbers for the six months to June and they aren’t pretty, with revenue down by 3%. That may not sound bad, but in a business with such high fixed costs, it’s a disaster. The headline loss per share came in at 150 cents, which is far worse than 40 cents in the comparable period.

    Net borrowings moved 26.9% higher to R3.8 billion. That’s also a lot higher than R3.2 billion at the end of December 2023. Unsurprisingly, the net asset value of the group has taken a major knock, down 42% in the past 12 months.

    It’s also important to note that EBITDA margin was negative, so this loss isn’t being driven by things like depreciation or finance costs. There’s a core problem in the business model in this environment. They are trying to save 3,500 direct jobs and 80,000 more in the value chain for the longs business, but these losses can’t carry on forever. Sales volumes were down 2% for the period thanks to weak demand and realised rand steel prices were down 3% for the same reason. To make it worse, the raw material basket increased by 3%.

    Worst of all, China’s domestic steel consumption is expected to remain weak in 2024, putting pressure on steel prices globally. What ArcelorMittal needs more than anything else is for the South African construction industry to pick up. Plant capacity utilisation is all the way down at 60% and you can see in these numbers what the effect of that is. For the second half of 2023, it was up at 68%.

    This is perhaps the bravest punt of all for a GNU environment of renewed investment in South Africa, but be very careful of the risk.

    Capital & Regional’s numbers show why there are suitors out there (JSE: CRP)

    The company has attracted the eye of potential acquirers

    Capital & Regional has announced its results for the six months to June. They look great, with net rental income up by 17.1%. The Gyle acquisition is part of this, so be careful of comparability. As we saw with Shaftesbury earlier in the week, valuations have also ticked higher – in this case, by 0.8% on a like-for-like basis.

    The 17.1% increase in adjusted profit hasn’t translated into dividend growth though, with the interim dividend up by 3.6%.

    It’s also worth noting that net asset value per share moved slightly lower, reflecting the impact of shares issued under the scrip dividend. The dilutionary impact of scrip dividends shouldn’t ever be ignored. The funds may retain cash, but they issue more shares along the way.

    On the debt side, the loan to value has reduced to 43% from 44%, with around 80% of debt hedged for the next two and a half years.

    NewRiver has until 15 August and Praxis has until 16 August to either announce a firm intention to make an offer for Capital & Regional, or announce that they do not intend to make an offer.

    Mondi’s EBITDA is down for the first six months (JSE: MNP)

    Trading has been in line with expectations

    The paper and packaging industry is notoriously cyclical, so profits will rise and fall accordingly. It’s important to remember that earnings “in line with expectations” is no guarantee that they went up. The expectation could’ve been for them to drop, as we’ve seen in the six months to June 2024.

    Mondi’s underlying EBITDA is down 17% for the six months to June. Revenue was only down by 4%, so EBITDA margin has deteriorated from 17.5% to 15.1%. Notably, cash generated from operations fell by 33% and net debt to EBITDA increased from 0.8x to 1.5x.

    Despite this, the interim dividend has been left flat at 23.33 euro cents per share. They also paid a special dividend earlier in the period of 160 euro cents per share, linked to the proceeds from the Russian disposal.

    The good news is that there was promising momentum over the period, with the benefit of price increases expected to be felt in the second half of the year. Be careful though, as they are planning more maintenance shutdowns in the second half and they expect to realise a forestry fair value loss.

    Things should get considerably better from 2025 onwards, when the full benefit of the investment programme will be felt. With return on capital employed of only 10.8% in this period, shareholders will be counting on it.

    Mpact has found a buyer for Versapak (JSE: MPT)

    It’s taken a few years to get this right

    Back in 2021, Mpact decided that selling Versapak would be the right way forward, as the business isn’t a strategic fit with the rest of the group. It’s taken around three years to reach the point where a deal has been announced, which shows you just how long disposals can take.

    Greenpath Recycling, a subsidiary of Sinica Manufacturing, has agreed to acquire Versapak for R268 million. There will be some adjustments to the price for stock on hand and employee liabilities at the effective date of disposal. The net asset value as at December 2023 was R239 million and profit before tax was R101 million excluding fair value gains. At a normalised tax rate, there’s an after-tax profit of around R74 million. This implies an earnings multiple for the disposal of around 3.6x. Much as Versapak might not be a strategic fit, it’s debatable whether they should be selling at that price.

    The disposal excludes all cash, debtors and creditors, so Mpact is responsible for wrapping up most of the working capital. It also excludes two properties, which I found surprising. The purchaser will lease these properties from Mpact. I can’t think of why Mpact would want to own the properties, so I suspect that the purchaser was simply unwilling or unable to acquire the properties as well.

    One of the properties is in Paarl and the other is in Gauteng. Sinica is based in Gauteng as well. Versapak is focused on styrene and PET trays, while Sinica is focused on plastic packaging products. These things are different enough that there hopefully won’t be any Competition Commission hiccups, with a planned effective date for the deal in the fourth quarter of 2024.

    Interestingly, the purchaser still needs to obtain the debt funding for the deal. Mpact seems confident that the guarantee from parent company Sinica is strong enough though. The full purchase price is payable on closing date and Mpact will put the proceeds towards settlement of debt.

    MTN Ghana is maintaining its margins (JSE: MTN)

    And growth is ahead of inflation

    After the terrible numbers from MTN Nigeria earlier in the week, it was good to see decent numbers at MTN Ghana. Importantly, growth in service revenue for the six months to June of 31.2% is well ahead of average inflation for the period of 23.9%. The other good news is that EBITDA is up 31.3%, so EBITDA margins have been maintained at 56.1% and there is real growth in profits (growth ahead of inflation).

    MTN Ghana is separately listed and has increased its dividend by 30%, so the earnings are being backed up by higher cash flows. They are investing heavily though, with capex excluding leases up by 68.3%.

    In further good news, a reduction in debt led to a decrease in net finance costs of 44.9%.

    And perhaps most impressively, the Ghana cedi depreciated against the dollar by 22.3% over six months, which is lower than the EBITDA growth. In other words, there was genuine growth in dollars.

    These numbers are better in every way than what we saw out of Nigeria. Sadly, Ghana isn’t big enough to rescue MTN’s Africa story.

    Little Bites:

    • Director dealings:
      • Aside from trades linked to share-based awards, the CEO of Bytes Technology (JSE: BYI) bought shares worth £25.3k.
      • A director of a major subsidiary of RFG Holdings (JSE: RFG) disposed of shares worth R247k.
    • Sabvest (JSE: SBP) announced that its indirect stake of 24.66% in Rolfes (held via Masimong Chemicals) is being sold to a foreign buyer as part of a transaction for all of Rolfes. Sabvest will receive R179.5 million from the disposal. Sabvest will use the proceeds to reduce debt.
    • Country Bird Holdings wasted no time in making its feelings known about the appointment of Piet Burger as a director at Quantum Foods (JSE: QFH). They immediately sent through a letter demanding that a meeting be called to remove him as director. This is of course in addition to the demand for the removal of the chairman and lead independent director of the board.
    • Mantengu Mining (JSE: MTU) must’ve lost a bet or something, as their share facility with GEM Global Yield is incredibly overcomplicated. The TL;DR of the convoluted structure is that just over R5 million has been raised under the facility – I think.
    • Sebata Holdings (JSE: SEB) released financials for the year ended March 2024. Although revenue was slightly higher at R33 million, the headline loss per share jumped to 101.62 cents. The share price is only R1.00, so there’s a rare example of a -1 P/E!

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

    Marylou Greig
    -
    0
    Who’s doing what this week in the South African M&A space?

    Exchange-Listed Companies

    Following Mpact’s 2021 strategic review, its subsidiary, Mpact Operations has disposed of its Versapak division. The division was sold to Greenpath Recycling, a subsidiary of Sinica Manufacturing, for R267,75 million. Versapak produces styrene and PET trays and punnets as well as vinyl cling film out of its two plants in Paarl and Gauteng. Mpact will be apply the disposal consideration towards the settlement of debt.

    Sabvest Capital has concluded an agreement with Amsterdam-based Solevo MEA to sell its 24.66% stake in agri-chemical firm Rolfes for R179,5 million. Once finalised, Solevo will dispose of 12.5% of its newly acquired stake in Rolfes to Afropulse who will be Solevo’s local partner.

    BHP Investments Canada (BHP) has agreed to jointly acquire 100% of TSX-listed Filo Corp. Filo Corp owns 100% of the Filo del Sol (FDS) copper project. BHP will pay US$2,05bn for its stake. BHP and Lundin Mining have also agreed to form a 50/50 joint venture to hold the projects – FDS and Josemaria (owned by Lundin) located in Argentina and Chile. The joint venture will create a long-term partnership between BHP and Lundin to jointly develop an emerging copper district.

    Zeder Financial Services (Zeder Investments) holds an 87.1% interest in Zeder Pome Investments which in turn holds 100% of Capespan Agri (CS Agri) which comprises three primary farming production units in addition to the Paarl-based operation Novo Fruit Packhouse. CS Agri is to dispose of the Novo Fruit operation, which comprises the cooling facility business and packhouse, to Dutoit Agri for a disposal consideration of R195 million, plus stock-on-hand of c.R5 million. The disposal is consistent with Zeder’s strategic review and its initiative to maximise wealth for shareholders.

    Rex Trueform has entered into a subscription agreement with the remaining shareholders of Belper Investments to subscribe for additional shares in Belper. Rex Trueform first acquired an initial stake in the property company in 2022 and as part of the transactions, the company advanced a loan of R19,7 million to fund the acquisition of a portfolio of industrial properties. A further loan of R1 million was made in 2023. The consideration payable by Rex Trueform for the subscription of shares will be the extinguishment of the debt owed by Belper which amounts to R27,37 million. Rex Trueform’s interest in Belper will increase by 18.35% to 72.03%.

    Sebata has alerted shareholders to the termination of transactions with Inzalo Capital. In August 2019 the company disposed of a 55% interest in the companies comprising the ‘Water Group’ namely USC Metering and Amanzi Meters and the donation of a 5% interest in the Water Group to Inzalo. In February 2020 Sebata disposed of the 55% interests in the companies comprising the ‘Software Group’ namely Sebata Municipal Solutions, R-Data and MICROmega Accounting and Professional Services and the donation of 5% interest in the Software Group. These transactions have been terminated as Inzalo Capital has not met its obligations in terms of the achievement of certain profit warranties. Sebata has, as a result, regained ownership of the equity interests originally disposed of and donated to Inzalo.

    Unlisted Companies

    The Mahela Group, a leading citrus and avocado producer and ZZ2 Group, a leading avocado and tomato producer, are developing a 400-hectare avocado and citrus farming operation in Weipe, Limpopo. The Skutwater project, as it is known, will see the current combined orchard size increase from 190 hectares to 400 hectares under the first phase with a potential to expand to 1,500 hectares in the second phase. There are also plans to develop expansion opportunities in neighbouring countries. AgDevCo, a specialist investor in African agriculture will take a minority equity investment.

    Pepsico SA is to sell its spreads and savoury food ingredient business to Anchor Yeast, the South African unit of Canadian Lallemand International. Financial details were undisclosed.

    Thebe Investment, a black-owned investment management company acquired a further 40% stake in Pride Milling earlier this year. Hybrid Capital, a division of Old Mutual Alternative Investments provided the funding to Thebe to facilitate the acquisition.

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

    Weekly corporate finance activity by SA exchange-listed companies

    Marylou Greig
    -
    0
    Weekly corporate finance activity by SA exchange-listed companies

    Orion Minerals has issued 23,675,000 new shares at an issue price of A$1.5 cents, to Webb Street Capital for the provision of professional services to Orion in South Africa.

    Lighthouse Properties has, on the open market, disposed of a further 111,070,447 Hammerson plc shares for an aggregate cash consideration of R765,63 million.

    Listed company Ellies Holdings has been placed under final liquidation while its operating entity Ellies Electronics remains in business rescue.

    The JSE has advised shareholders of Sebata that the company has failed to submit its annual report within the four-month period as stipulated in the JSE’s Listing Requirements. If the company fails to submit its annual report on or before 31 August 2024, its listing may be suspended.

    A number of companies announced the repurchase of shares:

    In line with its share buyback programme announced in March, British American Tobacco this week repurchased a further 414,634 shares at an average price of £27.32 per share for an aggregate £11,35 million.

    In terms of its US$5 million general share repurchase programme announced in March 2024, Tharisa has repurchased a further 7,452 ordinary shares on the JSE at an average price of R19.11 per share and 352,595 ordinary shares on the LSE at an average price of 82.25 pence. The shares were repurchased during the period 22 – 26 July 2024.

    Prosus and Naspers continued with their open-ended share repurchase programmes. During the period 22 – 26 July 2024, a further 2,772,135 Prosus shares were repurchased for an aggregate €89,04 million and a further 288,256 Naspers shares for a total consideration of R999,78 million.

    Four companies issued profit warnings this week: Sea Harvest, Sebata, Merafe Resources and Woolworths.

    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
    -
    0
    Who’s doing what in the African M&A and debt financing space?

    DealMakers AFRICA

    Egyptian fintech MNT-Halan has acquired Tam Finans in Turkey from Actera Group and the European Bank for Reconstruction and Development. Tam Finans is a commercial finance company with a loan booking exceeding US$300 million. Financial terms were not disclosed.

    Sweden’s development finance institution, Swedfund, has invested US$10 million in the Inside Equity Fund II which looks to support SMEs in Zambia, Madagascar, Mauritius, Tanzania, Malawi and Mozambique.

    Silicon Badia and Hub 71 have led a US$2 million investment in Egyptian AI startup, Synapse Analytics. The funding will be used to expand the company’s AI technologies across the Gulf Co-Operation Council (GCC) and Africa.

    Cartona, an Egyptian B2B e-commerce platform, has raised US$8,1 million in a Series A extension round led by Algebra Ventures and including existing investors Silicon Badia and the SANAD Fund for MSME. Cartona connects small retailers, FMCG producers, wholesalers and distributors on its platform.

    Intron Health, a Nigerian clinical speech-recognition startup, has raised US$1,6 million in pre-seed funding. The round was led by Microtraction, and included Plug and Play Tech Center, Jaza Rift, Octopus Ventures, Africa Health Ventures, OpenSeedVC, Pi Campus, Alumni and Angels, BakerBridge Capital, Google, ClEAR, NYU, and Optum. The funding will be used for its AI technology, with a focus on perfecting noise cancellation and handling multi-speaker conversations.

    Egyptian edtech, Educatly, has announced a funding round of US$2,5 million led by TLcom Capital and Plus VC. The round also included Egypt Venture and the HBAN syndicate.

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

    Trouble in paradise: removal of a Director

    Tessa Brewis, Jamie Oliver, Deepesh Desai and Ashleigh Solomons
    -
    0
    Trouble in paradise: removal of a Director

    When a director’s actions are not aligned with the company’s best interests, it can lead to reputational risks for the company itself, as well as the other directors involved.

    In the decision of Denton v Overstreet (CT01531ADJ2023) (1 February 2024), the Companies Tribunal took a decisive stand on the removal of a director as a result of a breach of their fiduciary duties towards the company.

    The procedure to remove a director has not always been clear, as the courts, as well as the Companies Tribunal, have not been consistent in their application and interpretation of the legal principles governing a director’s removal. The decision of Denton v Overstreet (CT01531ADJ2023) (1 February 2024) (Denton case) provides some clarity, at last.

    Companies Act: statutory removal of a Director

    The provisions relating to the removal of a director have been codified in Sections 71(1), 71(2) and 71(3) of the Companies Act 71 of 2008 (Companies Act).

    Prior to the Companies Act coming into force, a director’s duties were regulated in terms of the common law. The Companies Act codifies and extends the common law principles, in that Section 76 of the Companies Act provides for an increased standard of conduct expected from directors, compelling them to act honestly, in good faith, and in a manner which they reasonably believe to be in the best interests of, and for the benefit of, the company.

    Directors are entrusted with a fiduciary duty to use their authority and perform their roles honestly, in the company’s best interests, and with the expected level of care, skill and diligence. In terms of Section 77(2)(a) of the Companies Act, should they fail to meet these obligations, a director may incur personal liability for any loss, damages or costs sustained by the company as a consequence of any breach of their fiduciary obligations, and it may be necessary to remove them from their position.

    The Companies Act outlines procedures for the removal of directors by the board of directors of a company, the Shareholders of the company, and removal by an authorised judicial body. The board’s ability to remove a director is restricted to the ‘closed list’ of specific grounds, which include the director’s ineligibility, disqualification or incapacity, or neglect of their fiduciary duties. Conversely, the shareholders and the relevant authorised judicial bodies are not constrained by a ‘closed list’ of specific grounds for director removal under the Companies Act, and rather have an ‘open list’, which is in line with the basic corporate governance principles that directors are appointed at the discretion of the shareholders.

    Removal in terms of sections 71(1) and 71(2): procedural importance

    Section 71(1) of the Companies Act provides that “a director shall be removed by an ordinary resolution adopted at a shareholders meeting by the persons entitled to exercise voting rights in the election of that director”. The judiciary and the Companies Tribunal have long since emphasised the importance of following the correct procedural steps to remove a director, which are as follows

    • a shareholders’ meeting must be convened to vote on the director’s removal. Section 61(3) of the Companies Act provides that the board can convene a shareholders’ meeting if a formal request is submitted to the company. Should the board neglect its obligation to call a meeting, the shareholders’ recourse is to petition a court, under Section 61(12) of the Companies Act, to compel the board of the company to schedule the meeting;

    • it is mandatory to notify the director concerned of the proposed shareholders’ meeting and provide them with the proposed resolution for their removal. The period of notice should match the one that a shareholder is entitled to when a shareholders’ meeting is called. The shareholders may not vote on the resolution to remove the director unless such director was notified of the shareholder meeting;

    • the reasons for the director’s removal must be provided to the affected director in sufficient detail; and

    • the director must be afforded the reasonable opportunity to make representations on their impending removal.

    Any deviation or failure to apply the Companies Act’s procedures could result in the review and potential reversal of the director’s removal by the authorised judicial body.

    Removal in terms of section 71(3): procedural importance

    The board and shareholders have the power to dismiss a director, only if there are at least three directors in the company. As seen in the Denton case, where a company has fewer than three directors, the board cannot remove a director; instead, the removal procedure must be facilitated by the Companies Tribunal.

    In the Denton case, the Companies Tribunal sanctioned the director’s removal in terms of Section 71(3) because the director concerned was found to not have acted in the company’s best interests. The director concerned was removed, in terms of Section 71(3), as the Companies Tribunal found that the director’s non-deliverance of promised funding to the company, post utilisation of the company’s services and connections, jeopardised its financial well-being and thus amounted to a breach of the concerned director’s fiduciary duties towards the company. Therefore, it is imperative for directors to meticulously follow and align their actions with the provisions of the Companies Act, in order for their actions not to be construed as a breach of their fiduciary obligations towards the company, resulting in removal from the office of director.

    Additional considerations

    In following the procedure set out herein, to remove a director from office, certain additional considerations should be borne in mind, such as the following:

    • Per the Companies Act, all director elections, appointments and removals are to be timeously filed with, and processed by, the Companies and Intellectual Property Commission.
    • From a labour law perspective, if a director is also an employee of the company, removal of said director can involve certain nuances that should be considered in order to mitigate any claims against the company. A suitably qualified legal professional should be approached to facilitate the removal of a director, especially if it becomes apparent that there will be an intersection in the law that applies to the removal of a director.

    Tessa Brewis is a Director, Jamie Oliver an Associate Designate, Deepesh Desai an Associate and Ashleigh Solomons a Candidate Attorney, Corporate & Commercial | Cliffe Dekker Hofmeyr.

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

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

    Unlocking South Africa’s economic potential through strategic partnerships with Chinese incubators

    Krish Chetty
    -
    0
    Unlocking South Africa’s economic potential through strategic partnerships with Chinese incubators

    South Africa grapples with a trio of pervasive economic challenges: entrenched poverty, glaring inequality, and staggeringly high unemployment rates, which disproportionately affect the nation’s youth. With a formal unemployment rate of 32% and youth unemployment nearly doubling that figure, the urgent need for innovative solutions cannot be overstated.

    Incubators have emerged as vital entities in nurturing entrepreneurial ventures, but South Africa’s efforts in this domain are dwarfed by the sheer scale and success of China’s thriving incubation system. By meticulously examining and adapting lessons from China’s innovation ecosystem, South Africa can drastically enhance its incubation strategies, unlocking the potential for sustainable growth and economic development.

    This article draws from research into partnership strategies between South African and Chinese incubators. The recommendations focus on reimagining the South African incubator sector and strategically leveraging commitments made by the Chinese government to share knowledge and expertise with the African continent, paving the way for transformative collaboration.

    Streamlining Engagement through an Incubator Association

    Establishing a unified Incubator Association is essential to collaborate with Chinese counterparts and showcase South African capabilities effectively. This association would act as a bridge between the two countries, navigating the complexities of cross-cultural business practices and facilitating meaningful partnerships.

    Moreover, it would serve as a platform for knowledge sharing within the South African incubation community, enabling the refinement of strategies for successful collaboration with China. By presenting a united front and leveraging the collective expertise of South African incubators, this association can position the country as an attractive destination for Chinese investment and collaboration. Presently, the South African incubator sector is disparate and unorganised, making it difficult to leverage its collective expertise.

    Establishing a Shared Data Repository

    One of the key initiatives that could revolutionise the South African business landscape is the adoption of a shared data platform akin to those employed in China following its 13th Five-Year Plan. If the South African innovation ecosystem could tap into China’s data repository, accessing valuable insights, such information could be a catalyst for local innovation. Such a binational public-private partnership would foster new business creation and development by making a wealth of data – including governmental, geographic, environmental, legal, scientific and statistical information – readily accessible to entrepreneurs in both countries.

    By recognising the pivotal role of data in driving economic innovation and empowering businesses with the insights they need to succeed, South Africa can create an environment that fosters growth and unlocks new opportunities for collaboration and investment.

    Leveraging AI for Business Matching

    Building on the idea of a shared data platform, there is a further need to leverage data about our business practices, interests and goals. One of the most significant barriers to effective international collaboration is the knowledge gap about potential partners. To overcome this challenge, implementing an AI-driven online business matching platform could be a game-changer. This platform would connect companies based on their capabilities, needs and complementary strengths by leveraging advanced algorithms and machine learning techniques.

    This innovative solution would transcend geographical and cultural barriers, enabling South African and Chinese businesses to find the perfect match for their collaborative endeavours. By harnessing the power of technology to facilitate robust and meaningful partnerships, South Africa can position itself at the forefront of the global innovation landscape.

    Revitalising the Development Finance Ecosystem

    Entrepreneurs in South Africa often face significant hurdles when accessing finance and navigating the complex bureaucratic processes associated with business registration. The current paradox of a system that readily offers consumer credit but hesitates to fund business ventures must be urgently addressed.

    South Africa must embrace a more risk-tolerant approach to development finance to create an environment that truly supports entrepreneurial expansion and innovation. This approach requires a comprehensive re-evaluation of the financial ecosystem, including introducing targeted initiatives to support early-stage ventures, streamlining regulatory processes, and cultivating a culture that values and encourages entrepreneurship.

    By taking bold steps to revitalise its development finance landscape, South Africa can unlock the potential of its vibrant entrepreneurial community and create a thriving ecosystem that drives economic growth and job creation.

    To achieve sustainable economic growth and address its pressing challenges, South Africa must adopt a holistic approach that combines valuable lessons from China’s incubation success with targeted initiatives tailored to its unique context. South Africa can lay the foundation for a thriving innovation landscape through the preceding recommendations.

    These strategic partnerships with Chinese incubators will not only provide access to invaluable expertise and resources, but also position South Africa as a hub for entrepreneurial excellence and a prime destination for international investment. The path to prosperity lies in the power of innovation and collaboration. By taking advantage of these opportunities, South Africa can embark on a transformative journey that will reshape its economic landscape and provide a beacon of hope for its youth.

    Krish Chetty is a Senior Research Manager | Human Sciences Research Council.

    This article first appeared in Catalyst, DealMakers’ quarterly private equity publication.

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

    Ghost Bites (AECI | Altron | MTN | Shaftesbury | Woolworths)

    The Finance Ghost
    -
    0
    Ghost Bites (AECI | Altron | MTN | Shaftesbury | Woolworths)

    Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:

    AECI’s dividend is a thing of the past (JSE: AFE)

    And yet the share price is only slightly down this year

    For the six months to June, AECI suffered a drop in revenue of 4% and a substantial decrease in EBITDA of 24%. It only gets worse as you work down the income statement, with HEPS down 57% and no interim dividend declared.

    They describe recent organisational restructuring as going to the “third level below the Executive Committee” so they really have made a large number of changes. The market is being remarkably patient with the management initiatives based on the share price this year, which is only slightly lower despite the struggles.

    Some of the pain is strategic, like statutory shutdowns in AECI Mining that contributed to lower volumes of ammonia sales in South Africa at a time when ammonia prices were also lower. If the cost of shutdowns, including alternate sourcing of ammonium nitrate solution, is excluded (which you can’t really do), the AECI Mining segment was flat year-on-year at profit level. In reality, profit was down 12%. They expect volumes to increase based on a recovery in mining activity in South Africa. The export business is also doing well.

    AECI Chemicals saw revenue fall 4%, yet profits from operations increased by 9%. That’s great cost management, with operating margin up from 8% to 9%.

    AECI Property Services and Corporate recorded a loss of R484 million vs. a loss of R42 million a year ago. This included major corporate costs for various restructuring activities.

    Net debt is up to R5.1 billion from R4.4 billion at the end of December 2023 due to investment in working capital and the level of spend on restructuring activities. This is marginally higher than the guided range for gearing levels, so they need to bring that in line.

    Against this backdrop, it’s not surprising that the dividend is gone for now. They are hoping for a much stronger second half of the year, which should improve the balance sheet and hopefully bring the dividend back sooner rather than later.

    Altron’s positive momentum from the last financial year continued (JSE: AEL)

    HEPS is strongly in the green

    Altron closed 5% higher after releasing a strong trading statement for the six months to August. The great news is that continuing HEPS is at least 20% higher than the comparative period, which is the bare minimum disclosure for a trading statement. In other words, there’s a good chance that the move is much higher.

    The Own Platforms segment has delivered solid growth in EBITDA. This includes Altron FinTech, Altron HealthTech and Netstar. The IT Services segment saw revenue growth come through in Altron Digital Business, but EBITDA went the wrong way. Altron Security at least saw positive growth in EBITDA. Over at Altron Arrow, revenue is down and margins are steady, which means profits are down as well.

    On the discontinued operations side, offers received for Altron Document Solutions were below the board’s assessment of value in the business, so they’ve chosen to keep that business. It will be included in continuing operations and profits are higher.

    Altron Nexus is still part of discontinued operations.

    The Altron share price is up a massive 64% this year, showing what happens when a turnaround starts to work.

    MTN Nigeria has released half-year numbers (JSE: MTN)

    EBITDA has gone firmly the wrong way

    MTN’s troubles in Nigeria seem to be continuing, with MTN Nigeria’s EBITDA down by 10.9% despite service revenue increasing by 32.6%. When margins are disintegrating like that, there’s real trouble. EBITDA margin fell by a whopping 17.4 percentage points to 35.6%. When you consider that the inflation rate averaged 32.8% over the period, that service revenue increase doesn’t look impressive anymore either.

    Although these are local currency numbers, the weakness of the Nigerian currency still has an impact as some operating costs are linked to foreign currency. Adjusting for the effects of forex, EBITDA margin would’ve been 50.9%. This shows just how rough the macroeconomic situation is for the business, with an effort underway to reduce exposure to USD-denominated letters of credit.

    And despite all this pain, they have to keep investing in the business, with capex up 19.9%. At least free cash flow was still positive at N362.5 billion, admittedly 7.1% down on the comparable period.

    There doesn’t seem to be any relief on the horizon for MTN here.

    Rentals are up and so are valuations at Shaftesbury (JSE: SHC)

    There wasn’t much growth in value per share in the past six months, but there was some at least

    Shaftesbury is focused on the West End in London, which is a great place to be. Leasing activity in the six months to June achieved rentals that were on average 7% ahead of the December 2023 levels, so that’s impressive. Valuations also seem to finally be heading in the right direction, with a net tangible asset value per share of 193.4 pence per share, up 1.6% vs. December 2023. The rental growth is finally driving a modest uptick in valuations. For the past couple of years, we’ve generally seen property valuations go backwards in developed markets as yields moved higher.

    It gives further support to the balance sheet valuations that £216 million in disposals at a premium to book value were completed since Shaftesbury’s merger with Capital & Counties, with £86 million reinvested in acquisitions. The loan-to-value ratio is 30%, slightly better than 31% at the end of December. Either way, the balance sheet is strong.

    The interim dividend of 1.7 pence per share was 3% higher than the comparable period.

    Woolworths still needs to steady the ship (JSE: WHL)

    Earnings have dropped in the year ended June

    The Woolworths share price is down 24% in the past year, putting it in an unpleasant situation where it has strongly underperformed Shoprite and Spar for that matter. In fact, it’s only a bit better than Pick n Pay:

    In the results for the 53 weeks to June 2024, we can see why this has been the case. You have to be careful with comparability, as a 53 period isn’t comparable to 52 weeks. Also, they sold David Jones in the prior year. It’s therefore important to look at adjusted numbers on a 52-vs-52 week basis.

    Group turnover excluding David Jones and on a 52-week basis only increased by 4.3%. Things got slower in the second half, with growth of only 3.2%. Online sales were up 13.3% for the year and contributed 9.2% of group sales, so at least there’s some growth there.

    In South Africa, the Food business grew turnover by 9.0% on a 52-week basis. Price inflation for the period was 7.9% and comparable stores grew 6.9%, so this suggests that there was still a negative move in volumes. Also take note that the inclusion of Absolute Pets in the fourth quarter boosted the numbers, with sales growth of 9.6% in the second half. The summary is therefore that volumes are under pressure but Woolworths has continued expanding, including with trading space growth of 3.2%. Investing into a period of Pick n Pay weakness is probably the right approach. Online sales were up by a substantial 52.8%, contributing 5.5% of South African sales. Woolies Dash increased 71.2%.

    The Fashion, Beauty and Home business in South Africa could only manage a 0.4% decline in sales on a 52-week basis. Comparable store sales were up 1.3% if I’ve interpreted the announcement correctly, with a trading space decrease of 0.2% that helped drive the overall decrease. Comparable sales were impacted by a decline in sales volumes that mostly offset the price movement of 8.9%. That price movement is driven by a combination of inflation and full price sales, with the latter being very encouraging. Online sales grew 30.4% and contributed 5.6% of South African sales.

    Financial Services saw the book decrease by 2.9% year-on-year, or 1.8% excluding the disposal of part of the book Impairments improved from 7.3% to 7.0% for the period.

    Across the pond, Country Road Group saw a further deterioration in conditions in the second half, with consumer sentiment under real pressure. Sales fell 6.8% for the year and 8% on a comparable 52-week basis, with comparable stores down 13.1%. Even though there was a strong base, it’s still really messy. Trading space was up 4.0% due to expansion of concession channels, with the business using a tough period to help build out the right footprint for an upswing. Online sales increased to 27.6% of total sales.

    Adjusted HEPS on a 52-week basis fell by between 10% and 15%. It’s much worse if you include David Jones because of the impact of the timing of the disposal. As reported, Group HEPS is down by between 27% and 32% for the 53-week period to between 350 cents and 375.7 cents. Note that this includes the extra week of trading.

    Long story short: Food is doing pretty well again, FBH in South Africa needs to turn the corner and Australia is once again a major headache, this time without David Jones!

    Little Bites:

    • Director dealings:
      • An associate of a prescribed officer of Dis-Chem (JSE: DCP) sold shares worth R6.9 million in an off-market deal.
      • A director of Hudaco (JSE: HDC) exercised share options and sold all the shares received with a total value of R4.3 million.
      • An associate of a director of Hammerson (JSE: HMN) acquired shares in the company worth £80k.
      • Two directors of Premier Group (JSE: PMR) each acquired exactly the same number of shares worth R992k.
    • At the RECM & Calibre (JSE: RACP) AGM, the company noted that the name change to Goldrush Holdings will be effective from 14 August, with an associated accounting change that will see Goldrush consolidated rather than presented as an investment. This will give investors plenty of detail on this key investment. For the first four months of the year, the Bingo division is slightly down on revenue, Limited Payout Machines are flat on revenue despite having fewer sites, Sports Betting is in line with the prior year and Online has grown strongly. Total revenue for Goldrush is 5% higher year-on-year for the four month period. A further driver of profitability will be lower diesel costs as load shedding gently disappeared.
    • The ex-CFO of Tongaat Hulett (JSE: TON), Murray Munro, received a public censure and fine of R6 million back in April 2023. He was also disqualified from holding the office of director for a listed company for 10 years. He appealed to the Financial Services Tribunal and the application was dismissed, so the censure and penalties all stand.
    • MC Mining (JSE: MCZ) released an activities report for the quarter ended June. Run-of-mine coal production was 4% lower year-on-year. The trial with Paladar Resources for the sale of export quality coal seems to have gone well, with all high-grade inventory sold by the end of the quarter. Despite this, MC Mining elected not to extend the agreement. Sadly, thermal coal prices have remained depressed and well down on last year. Premium steelmaking hard coking coal prices are proving to be more resilient. Production costs per saleable tonne were 7% higher year-on-year, Of course, we now enter a period in which there are wholesale executive management changes after the recent corporate activity, with Godfrey Gomwe’s resignation as CEO effective from 30 June. Christine He is now the CEO.
    • Kore Potash (JSE: KP2) noted in a quarterly update that all outstanding commercial points on the EPC proposal were resolved in a meeting in Dubai in July. The legal advisors now need to finalise the agreements between Kore Potash and PowerChina. The next major step once these agreements are signed will be to finalise the funding with the Summit Consortium. The share price is up 212% this year in anticipation of agreements being finalised.
    • Southern Palladium (JSE: SDL) also released a quarterly activities report, noting that the pre-feasibility study campaign was successful. An updated mineral resource estimate will be released in the third quarter of calendar year 2024.
    • Shareholders of Spear REIT (JSE: SEA) have spoken loudly and clearly: the acquisition of the Western Cape property portfolio from Emira (JSE: EMI) was approved by 100% of votes present at the meeting!
    • Brimstone (JSE: BRT) released a trading statement for the six months to June. As this is an investment holding company, I would far rather focus on net asset value (NAV) per share rather than HEPS. The trading statement relates to HEPS though, which is up between 105% and 115%. I would largely ignore this and wait for results on 27 August.
    • Rex Trueform (JSE: RTO) and parent company African and Overseas Enterprises (JSE: AOO) announced a small related party deal that will see Geomer Managerial Services provide advisory services to Rex Trueform and subsidiaries. The previous agreement entered into in 2022 expired in June 2024 and this is a new agreement. The deal continues until June 2026 or fees for services rendered equal R12 million, at which point the agreement terminates automatically. Marcel Golding is a director of Geomer and a shareholder in it, so that’s why this is a related party deal. The terms have been determined as fair by an independent expert, even though I think it’s ridiculous that there’s literally a target for fees to be earned, at which stage the agreement terminates. Exactly what kind of behaviour is being incentivised here? Glad I’m not a minority shareholder in either company.
    • Dipula Income Fund (JSE: DIB) announced that Global Credit Rating Company (GCR) kept the ratings unchanged and affirmed the national scale ratings of Dipula of BBB+(ZA) for long-term and A2(ZA) for short-term credit.
    • Sebata Holdings (JSE: SEB) announced that the disposal of 55% in the Water Group businesses, along with the associated donation of 5% in that group, have fallen through. Ditto for the similar transactions for the Software Group businesses. In both cases, Inzalo Capital couldn’t meet the profit warranties, so Sebata regained ownership of these interests with effect from 1 July 2024.
    • Trustco (JSE: TTO) announced that the long stop date for fulfilment of conditions for the Legal Shield Holdings transaction has been extended from 31 July to 30 September. A circular will be distributed to shareholders soon.
    1...757677...231Page 76 of 231

    Focuses on making market news and investment concepts accessible, understandable and fun!

    Ghost Mail is free to read

    SUBSCRIBE TODAY

    Partner with Ghost Mail

    CONTACT US

    © Ghost Mail

    Verified by MonsterInsights