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Ghost Bites (Capital Appreciation | Gemfields | MAS | Master Drilling | Vunani)

The Finance Ghost
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Ghost Bites (Capital Appreciation | Gemfields | MAS | Master Drilling | Vunani)

A much better period for Capital Appreciation (JSE: CTA)

The Payments division remains the key

Capital Appreciation released a further trading statement for the year ended March 2025. Thanks to the initial trading statement released at the end of May, we already knew that it would be a good period with HEPS up by at least 20%. The latest update just confirms to what extent.

For the year, HEPS is expected to be between 24% and 26% higher vs. the restated base. Importantly, the restatements made HEPS in the prior year 2.8% higher, so it actually created a more demanding base. This makes the growth all the more impressive.

The expected range for HEPS is 17.35 cents to 17.57 cents. The share price is R1.66, so the company is trading at a pretty modest multiple despite the recurring nature of earnings in the key Payments division.

The Software division remains a headache, although to a lesser extent than in the prior period.

Despite huge challenges in Mozambique, Gemfields’ expansion project is nearly complete (JSE: GML)

Being “materially on budget” is an achievement here

Those who have been following the Gemfields story will know that the company had to raise capital due to suffering tough financial results at the same time as undertaking extensive expansion projects. The balance sheet buckled under this weight and shareholders needed to chip in with more capital.

The good news is that the second processing plant at Montepuez Ruby Mine (MRM) in Mozambique is 95% complete and “materially on budget” – and when you read of the challenges involved, ranging from getting work permits through to transporting equipment across Mozambique and managing illegal miner incursions, you realise just how impressive this is.

In terms of the emeralds in Zambia, Gemfields is taking a cautious approach. They’ve reopened a couple of production points at Kagem and they expect to expand operations from July, but full-scale production is not expected for “some months” based on current market conditions. This is an indication that pricing remains under pressure.

The final operational update is that the group is still looking at strategic options for Fabergé, which is a fancy way of saying that the business is for sale. With such a soft market at the moment for gems (and mined diamonds for that matter), there’s much uncertainty in the luxury jewellery space and those aren’t the right conditions for trying to sell a business. We will have to wait and see if someone is willing to buy it.

In a separate announcement, Gemfields confirming the shareholdings of major shareholders and key executives after the rights issue. I’ll just mention a few of them here. CEO Sean Gilbertson has a 4.13% stake in the company, so that’s meaty alignment with other shareholders. The underwriters of the rights issue, Assore International Holdings and Rational Expectations, hold 32.85% and 15.58% respectively.

The notice for the MAS Extraordinary General Meeting is out in the wild (JSE: MSP)

These advisory votes could create a strange situation

The recent activity around MAS has been fascinating to follow. As a reminder, we have PK Investments (the joint venture partner) on one side of the equation, with what started as a cheeky bid for the company that has now become an attempt to use cash in the joint venture as leverage to drive a broader value unlock strategy. On the other side of the equation, we may see Hyprop making an offer to shareholders, although there’s absolutely no guarantee of this.

To test the waters with shareholders, PK Investments requested MAS to call an Extraordinary General Meeting (EGM). The resolutions on the table are of an advisory nature only, as they don’t actually bind the company or its directors to anything. There’s also technically no guarantee of the joint venture paying the much-needed dividend that would upstream cash to MAS. I would see these resolutions as part of a broader process around the deal as the parties feel each other out.

The first resolution is to authorise the board to implement a “structured and commercially driven realisation of the assets of MAS” with the goal being to complete it within 5 years. The second resolution is to authorise the board to distribute the net proceeds of the joint venture dividend to shareholders.

The EGM is scheduled for 11 July. Will Hypop make a move before then, or will they wait to see how shareholders vote?

Master Drilling increases its stake in A&R (JSE: MDI)

This takes their holding from 51% to 66%

Back in 2021, Master Drilling acquired a 25% interest in the A&R group. In 2022, they exercised a call option to take the stake to just over 51%, which is a typical “pathway to control” structure that listed companies often look to implement.

It’s quite unusual to see a stake move higher than 51% unless the intention is to get to a 100% holding i.e. to have no minorities in the structure. Once you control the assets at a 51% stake, the benefit of holding an additional percentage up to 75% (the special resolution threshold) in the company is limited. This isn’t stopping Master Drilling from increasing its stake though, moving up to 66% in a deal that will see them pay for the additional stake over a five-year period.

The purchase price for the additional stake is R50.3 million. It will be paid for in 60 monthly instalment that attract interest at prime less 2%. The cap on the total payments is R119 million. This deferred payment structure is allowing Master Drilling to fund the deal from existing resources.

Master Drilling notes that benefits of this deal include things like increased influence over innovation and technical development, but there’s really no practical difference between having 51% and 66%. This is purely a capital allocation decision.

Vunani swings into losses (JSE: VUN)

And yet the dividend is much higher

Vunani released results for the year ended February 2025. Although revenue was up 4%, they saw a 66% decrease in their results from operating activities. The group swung from HEPS of 7.4 cents into a headline loss per share of 2.8 cents. Despite this, the final dividend was 35 cents vs. 9 cents in the prior period!

This is the group’s first headline loss in the past five years, despite revenue being at the highest level we’ve seen over that period. They also reported negative cash from operations of R9.4 million vs. positive R27.8 million, so that makes the dividend decision look even stranger.

Hopefully the sale of 30% in administration business Fairheads to Old Mutual Corporate Ventures will inject some life into Vunani, but I wouldn’t hold my breath. It remains a scrappy story with businesses facing tough fundamentals, like the asset management business and the ongoing decrease in assets under management, as well as the losses that they keep making in the securities and capital markets business.

Nibbles:

  • Director dealings:
    • It’s a good day to be part of the Saltzman family, with Dis-Chem founder (JSE: DCP) founder Ivan Saltzman distributing shares worth R6.8 billion within the family. The question now is whether the family can avoid the trap of generational wealth. Back in March 2024, Dominique Olivier wrote about the Vanderbilt family and the “shirtsleeves curse” in her Ghost Mail column.
    • The vesting of share awards at Vukile (JSE: VKE) led to sales by numerous directors and senior execs of amounts in excess of the taxable portion. These excess sales came to around R24.5 million.
    • The business development director of British American Tobacco (JSE: BTI) sold shares worth R4.4 million.
    • An executive director at Harmony Gold (JSE: HAR) sold shares worth R261.5k.
    • The company secretary of Alexander Forbes (JSE: AFH) sold shares worth R195k.
    • The CEO of Spear REIT (JSE: SEA) bought shares for himself and his minor children worth R56.7k.
  • Crookes Brothers (JSE: CKS) released a trading statement dealing with the year ended March 2025. Thanks to better performances in the banana and property segments, HEPS is up by 27% to 425.1 cents. The share price closed 9% higher at R30.
  • OUTsurance Group (JSE: OUT) has increased its stake in OUTsurance Holdings from 92.70% to 92.75%, thanks to more employees selling shares in the unlisted holding company in exchange for shares in the listed group.
  • The CFO of Kumba Iron Ore (JSE: KIO), Bothwell Mazarura, is stepping down as CFO and Executive Director after 8 years with the company. His notice period runs until the end of December 2025. Here’s the particularly interesting news though: his replacement is Xolani Mbambo, who is stepping down as CEO of Grindrod (JSE: GND). Mbambo brings plenty of experience in logistics to Kumba, so this appointment makes a lot of sense given the current operational challenges in iron ore in South Africa.
  • With James Day set to take the CEO role at Emira Property Fund (JSE: EMI), he’s stepping down as Financial Director of Castleview (JSE: CVW). He will however remain on the board of Castleview as Emira’s representative. Lida Le Roux will take over the top finance job from at Castleview. There was also a trading statement for Castleview, reflecting that the final dividend per share for the year ended March 2025 will be 30.1% lower year-on-year. This only gets a mention down here as there is literally zero liquidity in Castleview’s stock.
  • Marshall Monteagle (JSE: MMP) is another counter that has very little liquidity in the stock. A trading statement for the year ended March 2025 reflects a drop of 62% in HEPS and 93% in EPS. They attribute this to negative fair value adjustments on the investment portfolio and the movement in value of commercial properties.
  • African Rainbow Minerals (JSE: ARM) repurchased almost R500 million worth of shares between 31 March 2025 and 25 April 2025. This is the joy of having proper liquidity in this stock, something that comes with achieving scale on the local market (the market cap is over R36 billion).

DreamWorks: when collaborators become competitors

Dominique Olivier
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DreamWorks: when collaborators become competitors

When you sideline a rainmaker, you can’t act surprised when they start making it rain somewhere else. This is the story of how one botched promotion led to the creation of a real thorn in Disney’s side – and set a whole new direction for the animation industry. 

I would be remiss if I wrote one more sentence in this article without quoting that famous adage that we’ve all heard before: if you don’t build your own dreams, someone else will pay you to build theirs.

There’s a particular kind of corporate drama that only Hollywood can deliver – the kind with billion-dollar stakes, fragile egos, and enough behind-the-scenes beef to season a thousand Succession scripts. But this story isn’t fiction. It’s the very real tale of how Jeffrey Katzenberg, Disney’s comeback conductor, helped revive a dying studio… only to be shown the door, team up with Spielberg, and build the first real threat to the House of Mouse since Walt himself wore the crown.

The Katzenberg era: the resuscitation of a mouse

In 1984, Disney was floundering. At the box office, it was dead last among major studios. Animation was clunky. The live-action offerings were tepid. The house that Mickey built was on the verge of becoming irrelevant. It was time for a change in management, and fast. Enter Michael Eisner as CEO, and alongside him, Jeffrey Katzenberg as Chairman of Walt Disney Studios.

Katzenberg had been poached from Paramount, where he’d already built up a reputation as a no-nonsense, hands-on executive with a knack for spotting hits (he’d overseen Indiana Jones and the Temple of Doom and Terms of Endearment, to name just two). At Disney, he rolled up his sleeves and got right to work, much to the chagrin of a few animators, who weren’t accustomed to the c-suite getting so closely involved in their work. Katzenberg famously cut scenes from work-in-progress The Black Cauldron himself because he thought the film was bloated. This early butting-of-heads really set the tone for the rest of Katzenberg’s career at Disney: he may not have been well-liked, but he sure got things done.

He revived Disney’s animation division like it was his own pet project. And to be fair, it sort of was. Under his watch came the so-called “Disney Renaissance”, a string of hits that would put the embattled studio back at the top of the box office: The Little Mermaid, Aladdin, Beauty and the Beast, and The Lion King. These weren’t just crowd-pleasers – they were industry-defining films. Beauty and the Beast even landed a Best Picture Oscar nod, the first time in history that an animated film was nominated. But Katzenberg didn’t stop at singing crabs and enchanted teapots. He launched Touchstone Pictures, which churned out megahits for grown-ups (think Pretty Woman, Dead Poets Society, Good Morning Vietnam). Under his steer, Disney stopped being a nostalgic relic and started being cool again. You’d think the guy would be up for a corner office and a serious pay bump.

Unfortunately, that’s not how things panned out.

Trouble in paradise

By the mid-90s, Disney had transformed from an industry afterthought to an unstoppable creative engine. Internally, though, things were starting to crack.

Success is a funny thing. It makes people rich, yes, but it also makes people nervous. And when too much credit starts flowing toward one person, the rest of the boardroom gets twitchy. Behind the scenes, Katzenberg was clashing with both Eisner and Roy E. Disney (Walt’s nephew and board member). There were whispers that he was taking too much credit. That he was too ambitious. That he had presidential aspirations, not of the political kind, but of the corporate throne. He wanted the number two job at Disney.

When Disney president Frank Wells died in a helicopter crash in 1994, Katzenberg assumed he’d get the nod. Eisner disagreed. According to Katzenberg, Eisner had promised the job. According to Eisner, there were complications – namely, Roy Disney threatening a board revolt if Katzenberg moved up the chain.

Instead of a promotion, Katzenberg got the boot. Well, technically, his contract ended and wasn’t renewed. But by all accounts, it was clear: there was no longer room for him at the table.

Fine, I’ll build my own kingdom

Most people would lick their wounds. Maybe write a memoir. Not Katzenberg.

Within months, he was on the phone with Steven Spielberg and David Geffen. The result was DreamWorks SKG, a shiny new studio built from scratch, with Katzenberg running the animation division like it was his personal revenge tour.

DreamWorks would go on to roll out box office hits The Prince of Egypt, Shark Tale, Kung Fu Panda, and How to Train Your Dragon. But the real line in the sand came in the form of a flatulent ogre named Shrek – a movie that took direct aim at Disney’s fairytale formula, cast a villain suspiciously reminiscent of Michael Eisner, and snatched the first-ever Oscar for Best Animated Feature from right under the Mouse’s nose.

Shrek wasn’t just a box office smash. It was a cultural reset. It proved there was room for a different kind of animation – funnier, messier, more meta. Less hand-drawn, more CGI. DreamWorks had officially arrived. Katzenberg looked at the success of CGI films like Shrek versus the relatively tepid response to DreamWorks’ traditional animated films like Sinbad and Spirit and deduced that it was time to leave the sketchpads behind and embrace computer animation in full. This instinct would ultimately position DreamWorks ahead of the pack by the time rival CGI-only studios like Illumination reared their heads.

Meanwhile, Disney was navigating a rocky path, with internal spats, lukewarm releases, and a growing reliance on Pixar to keep the magic alive.

Talent lost is opportunity gained (for someone else)

What can businesses learn from all this? One thing: if you don’t nurture your best people, someone else will.

Jeffrey Katzenberg transformed Disney from a dusty relic into a cultural force. But rather than reward or retain him, the company let office politics win. In doing so, they didn’t just lose an exec, they created a rival with a mouse-shaped axe to grind. Talent like Katzenberg’s doesn’t just disappear when you push it out. It gets resourceful. It finds new playgrounds. Sometimes it even builds its own castle down the road, draws a moat, and starts launching catapults.

To be clear: not every star employee should get a blank cheque. And not every risk pans out. But the cost of letting talent walk away – especially when that talent is reshaping your industry – can be far greater than the cost of keeping them engaged, empowered, and maybe even a little ambitious.

Because if there’s one thing Katzenberg proved, it’s that nothing motivates a visionary quite like being underestimated.

About the author: Dominique Olivier

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

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

Dominique can be reached on LinkedIn here.

Ghost Bites (Libstar | MAS | STADIO | Standard Bank)

The Finance Ghost
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Ghost Bites (Libstar | MAS | STADIO | Standard Bank)

Libstar is looking better, but be careful of period comparability (JSE: BAT)

There’s an extra week of trading in the latest update

The market seemed to really latch onto the Libstar update, with the share price closing a whopping 16.6% up. Although the revenue growth rate of 10.1% looks strong at first blush, it’s extremely important to take note that the update compares a 21-week period to a 20-week period.

In other words, if we assume steady sales for each week, the 21-week period should be 5% higher purely due to the extra week. Now add in some inflation and hopefully improved trading conditions and the difference is even bigger. To make it even less comparable, the latest period is for the 21 weeks to 31 May and the comparable period was the 20 weeks to 24 May, so the additional week is a payday week of trading. In practice, I am confident that the extra week makes a difference of more than 5%.

Although Libstar does adjust for the disposal of Chet Chemicals in the update in an effort to get to like-for-like sales, there’s no adjustment for the extra week. So, when you see revenue growth of 10.1%, be very careful. The group’s volume growth of 5.2% was in all likelihood due to the extra week, leaving investors with little more than price and mix effects of 4.9% to hang their hats on.

If we look deeper into the numbers, Ambient Products saw revenue up by 11.5%, with volumes up 5.4% and price/mix changes of 6.1%. In Perishable Products, revenue was up 8.9% thanks to growth in volumes of 4.9% and price/mix changes of 4.0%. In both cases, I would ignore the growth in volumes.

In terms of outlook, Libstar just provides a generic comment around how they expect “positive trading momentum” for the rest of the year. This is despite an expectation for beef sales to remain weak in the winter months after the foot-and-mouth disease outbreak in May.

The games continue at MAS, with PK Investments calling a shareholder meeting (JSE: MSP)

Perhaps the message is landing that nobody wants a weird, inward-listed preference share

The MAS story has been an interesting one to follow. Essentially, PK Investments (MAS’ joint venture partner) has been trying to execute a cheeky offer for the company, structured as an offer by the joint venture entity itself (if that sounds strange, that’s because it is strange). To add to the weirdness, they hoped that shareholders would accept a modest share payment along with a new preference share that would be inward listed in South Africa. The initial offer was at a weak price relative to where MAS was trading, just to take this deal into the stratosphere of weirdness.

It didn’t take long for a white knight to appear in the form of Hyprop, using the MAS situation as an excuse to raise equity capital in the market in preparation for a potential bid for MAS. Incredibly, there’s no firm offer on the table from either Hyprop or PK Investments, so this is all posturing at present.

Hyprop seems to be able to sit back and let PK Investments blink first, as PK has now taken two additional steps. I must point out that Hyprop is now sitting with a cash drag problem on the balance sheet, so they can’t just hang back forever. But the strategy is working for now, as PK Investments keeps playing its hand.

The first step was to try and improve the offer and simplify it, although the structure was still far too fussy. The second and latest step is a request to convene a shareholders meeting, which the various PK Investments entities are able to do as the company holds more than 15% of MAS’ shares in aggregate. The meeting is to consider advisory resolutions that are not binding on the company. In other words, PK Investments is looking to get the opinion of shareholders.

PK Investments claims that engagements with shareholders have yielded generally positive views on the plan to unlock value from MAS through asset sales over a five-year period. This shouldn’t be a shock to anyone, as most property counters trade at a discount to NAV and hence a liquidation strategy would technically create value. Shareholders have indicated to PK Investments that there’s no need for PK to obtain control of MAS for this strategy to be followed though, which is a nice way of telling them to go away with their cheeky potential bid.

A few fluffy paragraphs later in the announcement and we get to the crux: PK Investments will refrain from proceeding with its bid and will distribute the cash in the joint venture if shareholders support a strategy to realise assets. This reads to me as PK essentially holding a gun to the head of MAS’ board and shareholders, saying that the funds in the joint venture won’t find their way to shareholders in any other manner. They literally say: “the Enhanced Value Unlock Strategy is expected to unlock significant value currently inaccessible to Shareholders and to return that value to them.”

This whole thing feels pretty weird. If MAS has no ability to extract cash from the joint venture without PK agreeing to do the same, then it was a horribly structured agreement from the start that gave all the power to PK. This power is now being used to dangle a carrot of €72.5 million in front of MAS, being the company’s share of the cash in the joint venture.

There are still many moving parts here. The question now is whether either MAS or Hyprop can find a way to put a better proposal in front of shareholders.

STADIO’s business update looks solid (JSE: SDO)

Student numbers continue to grow

STADIO is doing the right stuff. I’m a big fan of the business model and the results speak for themselves.

At the AGM, the company delivered a presentation giving an update on their performance. The most interesting part of the update related to student numbers as at June 2025, which is obviously new information. Distance learning numbers grew 8% to 43,837 and contact learning grew 11% to 7,041. Total student numbers increased 8% to 50,878, as the contact learning piece is so much smaller than distance learning and hence the total growth rate was similar to the growth in distance learning.

Another important point is that the Durbanville Campus is on track for opening in January 2026, housing 7 faculties. This is a big step for the group as they move towards being a full-suite university vs. having a collection of specialist tertiary facilities. This will also drive an increase in contact learning students relative to distance learning students. They must be happy with the initial signs of interest, as the board has already approved phase 2 of the development, due to open in August 2026.

If you’re keen to learn more about the company, the podcast that I did in April with the CEO and CFO is still highly relevant. You’ll find it here.

Standard Bank is still managing double-digit earnings growth (JSE: SBK)

The flurry of selling by company execs in recent months remains a mystery to me

It’s unusual to see several executives selling shares at roughly the same time, unless they specifically relate to a share award. But at Standard Bank, the theme in recent months has been considerable selling by company insiders, including the CEO. This is typically a red flag. Although Standard Bank’s growth is telling a different story at the moment, there are some underlying concerns that are worth looking at in the context of the director dealings.

The company is keeping investors well informed regarding performance. After an update for the first quarter, they’ve followed up with an announcement dealing with the performance for the five months to May. They’ve carried on where they left off in the first quarter, with headline earnings growing at roughly 10% in rand. In constant currency, the growth rate is in the mid-teens. Return on Equity remains in the target range of 17% to 20%.

This performance has been achieved despite sluggish demand for credit in South Africa and a decline in the net interest margin as rates have slowly decreased. Net interest income was thus flat, with rate decreases that are big enough to impact margins and too small to really drive economic growth. All the growth is coming from non-interest revenue sources that grew by mid-teens for the period. Market volatility is helpful for trading revenue, but the challenge is that this is a non-recurring source of revenue in comparison to a steady uptick in net interest income (which is what is lacking at the moment).

The group’s credit loss ratio is just above the targeted range of 70 to 100 basis points, but has improved vs. the comparable period. South African retailers have really turned on the taps for credit sales, so it will be interesting to see how the credit environment evolves this year.

The outlook for the year ending December 2025 still reflects banking revenue growth of mid-to-high single digits (in rand), improvement in the cost-to-income ratio and a group return on equity in the 17% to 20% range. Having said that, Standard Bank has warned that June 2024 is a demanding base and that headline earnings growth for the six months to June 2025 is likely to be lower than for the five months to May 2025.

The reasons may not be obvious yet in the numbers, but I would continue to be nervous of this story after all the recent insider selling.

Nibbles:

  • Director dealings:
    • Dealings really do come in all shapes and sizes. The latest example at Super Group (JSE: SPG) is especially interesting, as the disposal of SG Fleet and the subsequent special dividend left the CEO and CFO in a position where they no longer met the minimum shareholding requirement of holding shares equal to at least three times their historical annual base pay. This is because the special dividend naturally led to a large drop in the share price, as the company literally became smaller. To rectify this, the CEO and CFO bought shares worth R7.9 million and R4.3 million respectively.
    • A couple of MultiChoice (JSE: MCG) directors and the company secretary aren’t waiting for the Canal+ deal to go through, with sales of shares worth close to R1.4 million in relation to the vesting of share awards.
    • A director of a major subsidiary of Vodacom (JSE: VOD) sold shares worth R980k.
    • An associate of a director of Trematon (JSE: TMT) sold shares worth R43.4k.
    • A person closely associated with a director of Hammerson (JSE: HMN) bought shares worth around R29k through a dividend reinvestment plan.
  • Brikor (JSE: BIK) has released results for the year ended February 2025. The market cap is just R142 million and there is very little liquidity in the stock, so it only gets a passing mention down here. Brikor’s revenue increased by 8.6%, but HEPS fell by 61.5% to just 0.5 cents per share. The major negative contributors were the coal segment (a loss of R21.3 million) and the income from associate which fell from R23.8 million to R5.3 million.
  • Southern Palladium (JSE: SDL) has finalised the issuance of shares to raise A$8 million to fund the definitive feasibility study and near-term mine development activities at the Bengwenyama project. As I frequently remind you, ongoing capital raising activities are simply part of the game when it comes to junior mining houses.
  • Coronation (JSE: CML) has confirmed that Mary-Anne Musekiwa’s last day as Finance Director will be 30 June 2025. There will then be a structured handover period. As for who she is handing over to though, we still don’t know – the company hasn’t named a replacement.
  • HomeChoice (JSE: HIL) achieved 100% approval at its general meeting to change its name to Weaver Fintech Ltd. I think this is a good move as it indicates exactly where the growth opportunity lies.

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

Delta Property Fund has entered into a sale agreement with Vivid Yellow Investments, to dispose of 101 De Korte Street in Braamfontein for a cash consideration of R25 million. The disposal is a category 2 transaction and as such does not require shareholder approval.

Astoria Investments has concluded the sale of its 49% interest in ISA Carstens, announced in January 2025. There was no adjustment to the purchase consideration of R66,8 million.

Unlisted Companies

Cape Town-based startup Open Access Energy (OAE) has raised US$1,8 million in a seed funding round backed by E3 Capital, Equator and Factor E. OAE is focused on using AI to enable digital infrastructure for electricity trading – its flagship product, EnergyPro, is a cloud-based software platform that enables energy wheeling, a process of delivering electricity from decentralised renewable producers, to consumers via existing transmission infrastructure. The investment will enable AOE to scale its platform and support the growing demand for flexible decentralised energy infrastructure in South Africa.

Wetility, a South African solar-as-a-service provider, has closed a R500 million structured capital agreement with Jaltech, a funder of solar energy projects in South Africa. The funding structure comprises a tailored blend of senior and equity capital, which will enable Wetility to provide clean, reliable and cost-effective energy to homes and businesses. In a statement, the parties believe the deal will serve as a blueprint for future funding rounds to support a national scale-up strategy and so enable the deployment of solar energy to ‘hundreds of thousands more homes and businesses over the coming year.’

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

In terms of its Dividend Reinvestment Plan (DRIP) Hammerson plc has, on behalf of shareholders electing this option, purchased 158,298 shares in the market at an average price of £2.84 per share and 154,921 shares in the local market at an average price of R70.22 per share.

Following the placement of 23,768,040 MTN shares in an accelerated book build, MTN Zakhele Futhi (RF), MTN’s B-BBEE vehicle, intends to declare a special dividend of at least R15 per MTNZF share.

Ninety One plc will issue 13,675,595 consideration shares to Sanlam in terms of the deal announced in November 2024 which sees the transfer of Sanlam Investment Management to Ninety One. The consideration represents a c.1.5% equity stake in Ninety One.

The JSE approved the transfer of the listing of Brimstone Investment Corporation to the General Segment of Main Board with effect from 17 June 2025. The listing requirements in this segment are less onerous for the smaller and mid-cap firms.

Following shareholder approval Gemfields has successfully raised US$30 million in a rights issue of 556,203,396 new shares. The rights issue was fully underwritten by Gemfields’ two largest shareholders, Assore International and Rational Expectations. Valid acceptances for 458,330,512 new shares were received representing c.82.40% of the total number of new shares to be issued. The remaining 97,87 million shares will be subscribed for by the underwriters.

Caxton and CTP Publishers and Printers have repurchased 23,911 shares for a total consideration of R339,536 in terms of the Odd Lot Offer to shareholders announced in April 2025. The shares have been cancelled and reinstated as unissued share capital.

Southern Palladium has completed the allotment of 16 million new fully paid ordinary shares at A$0.50 per share, which raised A$8 million before costs. The shares were issued at a 10.5% premium to the 10-day VWAP of A$0.45 per share. The funds will be used to accelerate the Definitive Feasibility Study and near-term mine development activities at the Bengwenyama mine.

This week HomeChoice International plc shareholders approved the proposed change of name to Weaver Fintech, marking a major shift in the company’s focus and growth strategy. The decision comes as the company’s fintech division has emerged as its main engine of growth and profitability.

The JSE has released the names of those companies who have failed to submit annual financial statements within the three months period as stipulated in the Listing Requirements. These are: African Dawn Capital, Brikor, Efora Energy, Copper 360 and Visual International. The companies have until 30 June 2025 to do so, failing which their listings may be suspended.

This week the following companies announced the repurchase of shares:

Glencore has completed the US$1 billion share buyback programme announced on 19 February 2025 repurchasing 268,121,000 shares for treasury. The company now holds 1,292,409,041 shares in treasury and has 11,932,590,959 shares in issue (excluding treasury shares).

In its annual financial statements released in August 2024, South32 announced that it would increase its capital management programme by US$200 million, to be returned via an on-market share buy-back. This week 1,119,646 shares were repurchased at an aggregate cost of A$3,61 million.

In October 2024, Anheuser-Busch InBev announced a US$2 billion share buy-back programme to be executed within the next 12 months which will result in the repurchase of c.31,7 million shares. The shares acquired will be kept as treasury shares to fulfil future share delivery commitments under the group’s stock ownership plans. During the period 9 to 13 June 2025, the group repurchased 147,764 shares for €9,46 million.

Hammerson plc continued with its programme to purchase its ordinary shares up to a maximum consideration of £140 million. The sole purpose of the buyback programme is to reduce the company’s share capital. This week the company repurchased 306,193 shares at an average price per share of 293 pence for an aggregate £897,665.

In line with its share buyback programme announced in March 2024, British American Tobacco plc this week repurchased a further 443,168 shares at an average price of £36.06 per share for an aggregate £15,98 million.

During the period 9 to 13 June 2025, Prosus repurchased a further 5,135,094 Prosus shares for an aggregate €242,9 million and Naspers, a further 305,608 Naspers shares for a total consideration of R1,65 billion.

Two companies issued profit warnings this week: Vunani and Brikor.

During the week three companies issued or withdrew cautionary notices: Tongaat Hulett, PSV and Metrofile.

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

Globeleq has reached agreement with Norfund to acquire its 51% equity stake in Zambian company, Lunsemfwa Hydro Power Company which operates two hydroelectric power plants and is constructing a 20MW solar PV project. The remaining 49% is held by Wanda Gorge Investments. Financial terms of the deal were not disclosed. The deal represents Globeleq’s first investment in hydropower in Africa.

BetaLab, the innovation and incubation hub of Britam Holdings, has invested Ksh5 million in Kenyan fintech Oye. The investment aims to boost access to insurance and ease fuel costs for the country’s two million boda boda drivers.

In Morocco, H&S Invest Retail has announced a strategic merger with the Mr Bricolage Maroc Group. The deal is structured as the acquisition by H&S of a 47.5% stake from the Benjelloun Family, 37.5% from O Capital Group and the acquisition by Majid Benjelloun, its Managing Director, of an additional 5% stake to increase his final stake to 15%. Financial terms were not disclosed.

Etablissement Maurel & Prom S.A and Afentra plc have agreed to jointly acquire Etu Energias S.A.’s 10 interest in Block 3/05 and 13.33 interest in Block 3/05A located offshore in the Lower Congo Basin of Angola. Each party will pay an initial US$23 million for their 50% share plus and contingent consideration of up to $11 million.

PZ Cussons has sold its 50% stake in PZ Wilmar to Wilmar International for US$70 million. PZ Wilmar, a sustainable palm oil business in Nigeria, was formed as a joint venture in 2010 by PZ Cussons plc (UK) and Wilmar.

Nambia’s O&L Leisure has acquired two new hospitality properties – Le Mirage in the Sossusvlei area and Divava on the Kavango River. Financial terms of the deal were not disclosed, and the deal is still awaiting Namibian Competition Commission approval.

Fintech-focused investment firm, DisrupTech Ventures has made its first investment outside of Egypt – backing Nigerian startup, Winich Farms. The agtech focuses on improving marker access and financial inclusion for smallholder farmers in Nigeria. The funding is part of a Pre-Series A round.

British International Investment, the African Development Bank and the European Bank for Reconstruction and Development have announced that they are providing a total of US$ 479.1 million to Obelisk Solar Power SAE, a special-purpose vehicle incorporated in Egypt and owned by Scatec ASA. The blended financing will support the development of a 1.1 GW solar photovoltaic power plant integrated with a 200 MWh battery energy storage system in the country’s Nagaa Hammadi region.

Nigerian fintech, Hizo has raised US$100,000 in seed funding through a friends and family round that closed on 4 June. The investment was led by a prominent local investor.

The International Finance Corporation has announced a US$72 million debt package to Abydos Solar Project Company, a subsidiary of AMEA Power. The funding will be used to support Egypt’s first utility-scale battery energy storage system (BESS) through the integration of the 300MWh BESS into a newly commissioned 500MW solar photovoltaic power plant in Kom Ombo, Aswan Governorate which become operational in 2022.

Egyptian fintech, Octane has raised US$5,2 million in a funding round led by Shorooq Partners, Algebra Ventures and Elsewedy Capital. Octane, founded in 2022, provides a digital platform for fleet and on-road expense management.

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

Helmets and clauses: protecting yourself against sandbagging

Roxanna Valayathum and Keagan Hyslop
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Helmets and clauses: protecting yourself against sandbagging

It is a strange thought that an outsider may know more about the affairs of a company than the company’s own management team. However, this phenomenon is not uncommon in the M&A space, where comprehensive due diligences are undertaken by armies of experts hired by a purchaser to scrutinise every aspect of the business operations of a target company. The result is that a seller may reasonably believe that it can offer a warranty regarding the target, but the purchaser – after its due diligence – may be aware that the seller’s representation is not true. The practice of the purchaser remaining silent and accepting such a warranty despite knowing it is not actually true, in order to retain a claim for breach following closing, is referred to as “sandbagging”.

Historically, the term “sandbagging” is believed to refer to the practice of hitting an unsuspecting victim over the head with a sandbag before robbing them. Clearly, the spirit of the practice remains the same, despite the change in methodology over the years. Sandbagging within the M&A space is well fleshed out in other jurisdictions whose laws have evolved to address it, in one way or another. However, this concept has not yet been properly explored within South African law and remains a grey area.

South African contract law is informed by values such as Ubuntu, good faith, fairness and reasonableness. However, these values are not standalone requirements and must also be balanced against the need for certainty between parties and the equally recognised values that support the freedom to contract and to have such contracts be honoured.

Good faith and fairness

Consider a seller selling 100% of its shares in a target company. If the seller represents to the purchaser that the target complies with all applicable laws, despite knowing such representation is false, this is a misrepresentation. The law recognises that such conduct of the seller is in bad faith and offers various remedies to the purchaser. However, the situation differs where the purchaser, after conducting its due diligence, is aware of the target’s non-compliance, but the seller, acting in good faith and to the best of its knowledge, offers to warrant the target’s compliance. Arguably, it may be bad faith for a purchaser to agree to the warranty’s inclusion simply to have a claim for breach as soon as the contract is closed, particularly since the purchaser could seek protection from more appropriate legal mechanisms if it disclosed the non-compliance (such as an indemnity, or making the agreement conditional on such non-compliance being rectified). However, the law will not necessarily aid the seller for various reasons.

Firstly, a warranty is a representation made by the seller – not the purchaser. The purchaser is not responsible for the representations that the seller chooses to make, even if the seller is acting in good faith and is unaware of its misrepresentation. Secondly, there is no standalone requirement that contracts must be concluded in good faith, and merely concluding an agreement in bad faith will not render it unenforceable. The court would only set aside such a contract if, due to the bad faith of the purchaser, the enforcement of the terms of the contract would be so unreasonable and unfair that it would be against public policy and therefore unlawful, which is not a guarantee where sandbagging is involved.

Commercial and legal certainty

South African courts recognise the importance of commercial and legal certainty in the law of contract. Parties who negotiate, bargain and agree on something should be able to rely on such agreement, even if it is not entirely fair or reasonable. It is not unlawful to contract to your own detriment. This is particularly so where the contracting parties are sophisticated, well-advised and hold relatively equal bargaining power – as is often the case in the M&A space. In such a situation, the courts have previously shown that they are more reluctant to interfere with the terms of the contract, as it is assumed the parties had the opportunity to protect their position during negotiations. This creates the difficulty that, as there is no clear legal position on sandbagging in South Africa, it will be for the parties to regulate the position through agreement. If a seller offers a warranty but does not limit its liability, where the purchaser was aware of the falseness of such warranty, it is possible that the courts will not interfere with those terms.

The lack of specific legal rules dealing with sandbagging in South Africa means that the courts will likely apply general rules and principles if a case of sandbagging makes its way to a courtroom. The facts and circumstances of the matter will strongly influence the court’s decision. There may be greater sympathy for a seller with a weaker bargaining position and fewer resources than to the purchaser. However, the courts are likely to favour upholding the contractual terms where the bargaining positions and resources of the parties are relatively equal.

The upshot: there is uncertainty on the topic of sandbagging in South African M&A. Where there is legal uncertainty, it is up to the parties to take matters into their own hands and regulate the position contractually in order to manage risk. A seller may wish to include anti-sandbagging clauses in a contract to limit its liability where a purchaser has knowledge of the breach of warranty prior to the signature date. A purchaser, however, may want to refine the anti-sandbagging clause to reduce the parameters of such limitation. Ultimately, both sides must be firm in protecting their position contractually instead of relying on a court coming to their rescue.

Roxanna Valayathum is a Director and Keagan Hyslop an Associate in Corporate and 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

Urgent investment needed to mitigate the effects of climate change in Africa

Hubert Gutsa and Semoli Mohkanoi
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Urgent investment needed to mitigate the effects of climate change in Africa

Ten years on from the Paris Climate Accord of 2015, the negative impacts of climate change continue to exacerbate the existential threats to ecosystems and society – both globally, and in Africa. In fact, despite the fact that Africa contributes only approximately 4% of global carbon emissions, seven out of 10 countries most at risk from climate change are African.

According to the World Meteorological Organisation, African nations are losing up to 5% of their GDP per year due to extreme and catastrophic climate-induced events, and many African nations spend as much as 9% of their national budgets on climate adaptation policies. There is also a massive, growing health risk – rising temperatures, shifting rainfall patterns, and more frequent extreme weather events are impacting nearly every dimension of human health in Africa. Since 2019, there has been a disconcerting increase in the proportion of deaths related to malnutrition, and vector-borne illnesses like malaria and dengue fever, as well as water- and food-borne diseases, such as cholera, are resurging or appearing in new areas as the climate becomes more erratic.

Food production shocks due to climate increasingly threaten food security in the region. According to the International Labour Organisation, agriculture provides livelihoods for more than half of Africans, and agriculture systems both contribute to climate change and suffer from its effects. For example, overgrazing increases the risk of drought, which may degrade pastures and water sources. At particular risk are pastoralist communities in African drylands, where precipitation is already highly variable and uncertain.

These variables make for a climatological witches’ brew that data reveals is reaping dire consequences for citizens across the continent and around the world. Amid this challenge, the private sector can play a crucial role by investing to support resilient and sustainable infrastructure.

Private investment can be part of the solution

In this context, institutional fund managers Scalar International and Mergence Investment Managers have, in partnership, launched a private equity fund to finance clean energy and digital infrastructure in sub-Saharan Africa, with a target size of US$100-150 million. The Africa Decarbonisation Fund will invest in energy-efficient / decarbonisation projects in the private commercial and industrial (C&I) sector within SADC, with a focus on women- and youth-led SMEs. The potential is significant as, according to Bloomberg, by 2030, the electricity demand in Africa’s C&I sector is expected to grow by more than 270% compared with current levels.

The target is to reduce 1 GT of carbon emissions by 2030; achieve energy efficiency in 30,000 buildings by crowding in investment of at least $400 million; and create 15,000 full-time jobs.

Scalar is a black-owned international venture capital and private equity firm with experience in clean energy and other programmes in the US; Mergence is a leading black-owned institutional fund manager with a strong impact investing track record in SADC.

Scalar is one of only five fund managers chosen out of 66, as part of the 2024 cohort of the International Climate Finance Accelerator (ICFA) – a programme powered by Accelerating Impact. Accelerating Impact is an independent non-profit initiative, set up as a public-private partnership in 2018 by the state of Luxembourg and a dozen private partners with deep experience in impact finance, with a mission to accelerate the impact finance leaders of tomorrow across the globe.

The ICFA is a unique multi-year programme that includes technical and financial support to selected impact investment managers in their start-up phase, who have strong, innovative climate investment strategies and are in the process of fundraising. To date, 39 fund managers have been supported.

The Scalar-Mergence Africa Decarbonisation Fund is also one of only 10 so-called “Article 9” funds worldwide, launched recently by the EU’s Sustainable Finance Disclosure Regulation (SFDR) to facilitate the attraction of Limited Partners to private equity funds.

The fund’s pipeline of projects is primarily in the data centre and manufacturing sectors, which have seen a 40% decrease in grid energy reliability due to their reliance on the regional energy pool. Most SADC member states consume their energy from the Southern African Power Pool, which is primarily 40% hydro energy and 50% coal-powered energy.

The fund is in advanced negotiations with European Development Finance Institutions in support of the EU-Africa Global Gateway Investment Package. The fund seeks to work with local pension funds in support of South Africa’s national determination contributions, together forming a Global Just Transition Partnership using the Scalar platform.

Investments will be guided by four of the United Nations Sustainable Development Goals (SDGs) – 7 (affordable and clean energy); 8 (decent work and economic growth); 10 (reduced inequalities); and 13 (climate change).

Investee businesses will be put through their own incubator and accelerator programme by the Scalar-Mergence fund, providing training and technical, as well as financial, assistance.

Clean energy in an African context

Africa holds 60% of the best solar resources globally, yet has only 1% of installed solar photovoltaic capacity. Furthermore, women make up 48% of the global workforce, yet account for less than 20% of labour in the renewable energy sector.

According to the International Energy Agency, 43% of the African continent’s population lack access to electricity, and many African governments are struggling with power infrastructure – South Africa’s power utility being no exception.

Massive investment is clearly required, and given the growth potential, investors could see robust and steady long-term returns while making a significant impact on the lives of millions of people in Africa.

Hubert Gutsa is CEO of Scalar International, and Semoli Mohkanoi, CCO of Mergence Investment Managers

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

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

Regulatory predictability: A key priority for African Competition Authorities amid investor uncertainty

Nazeera Mia
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Regulatory predictability: A key priority for African Competition Authorities amid investor uncertainty

In an era marked by geopolitical and economic volatility, the call for legal and regulatory certainty in African markets has never been louder. For investors navigating these markets, particularly in the context of competition law, predictability is paramount. African competition regulators, to their credit, are increasingly cognisant of this need, and are actively working to deliver clear, coherent, predictable and consistent regulatory frameworks.

Heightened complexity

Regulatory unpredictability can take many forms—chief among them, overly complex legal frameworks and insufficient clarity on their interpretation. These can inadvertently lead to regulatory fragmentation, overlapping mandates and, ultimately, a chilling effect on investment and competition.

At last count, 35 African countries had enacted national competition laws, with additional layers emerging at the regional and continental levels. While this expansion reflects growing regulatory maturity, it has also heightened complexity. Key issues include the need for clarity around concurrency of jurisdiction and the harmonisation of enforcement mechanisms and procedural guidelines.

Towards regional one-stop shops

Regional one-stop shops for merger control provide a single, centralised authority for merger review in transactions that span multiple jurisdictions. This gives transacting parties a clear and predictable pathway for notification and approval. Instead of having to navigate a patchwork of differing national laws, filing requirements and merger review timelines, parties can anticipate a uniform process, reducing legal uncertainty and procedural surprises.

In the COMESA Common Market, significant changes are on the horizon, as the COMESA Competition Commission (CCC) intends to adopt revised Competition Regulations, intended to come into effect during the third quarter of 2025. The revised regulations will reaffirm the CCC’s exclusive jurisdiction over mergers with a regional nexus, reinforcing its role as a single point of contact for such filings.

The East African Community Competition Authority (EACCA), while not a new institution, is set to assume a similar role for its member states — Burundi, the DRC, Kenya, Rwanda, Somalia, South Sudan, Uganda and Tanzania. Amendments to the EAC Competition Act and Notices relating to merger control were gazetted in December 2024, introducing yet another regional competition law regime that transacting parties need to navigate.

Notably, the CCC and EACCA share jurisdiction over Burundi, the DRC, Kenya, Rwanda and Uganda. That said, the CCC and EACCA are in discussions to resolve the issue around dual jurisdiction, and to avoid requirements for merging parties to notify in both jurisdictions.

A parallel development is occurring in West Africa. In 2024, the ECOWAS Regional Competition Authority (ERCA) introduced new legal instruments, further clarifying the region’s merger control framework. Under the expanded framework, cross-border mergers that involve at least two member states and meet prescribed financial thresholds are mandatorily notifiable to ERCA. The objective of ERCA is clear: to avoid duplicate filings at the national level, thereby increasing procedural efficiency. The Nigerian Federal Competition and Consumer Protection Commission (FCCPC), however, has indicated that they take an opposite view and still require notification under the national merger control regime. ERCA and the FCCPC are in discussions to resolve the issue around dual jurisdiction. Also to be noted is that a number of ECOWAS member states are also member states of the West African Economic and Monetary Union (WAEMU), where competition law is regulated at a regional level by the WAEMU Commission.

Enhancing legal coherence through collaboration and capacity building

It is widely acknowledged that the development of competition law frameworks across Africa must be rooted in consultation and stakeholder engagement. Legal certainty is best achieved through a participatory process involving regulators, policymakers, the private sector and the legal community.

Moreover, alignment with internationally accepted best practices — whether in merger review standards, investigative procedures, or remedial measures — will enhance coherence and reduce the risk of fragmented enforcement across jurisdictions.

Institutional unpredictability also warrants attention. Economic constraints in some jurisdictions may hamper regulatory capacity, occasionally leading to reactive or inconsistent decisions. Political transitions, too, can disrupt enforcement priorities or redirect focus to other policy imperatives, further complicating the competition regulatory landscape.

Regional regulators are well aware of the structural disparities among member states — be they in the form of varying competition law maturity, resource constraints, linguistic diversity, or differing national priorities.

Strengthening the authority and autonomy of regional bodies in overseeing cross-border mergers represents a constructive step toward reducing this variability.

In COMESA, for example, the CCC has been a key player in building a coherent and effective enforcement ecosystem across the COMESA Common Market. Through strategic collaboration and robust capacity-building programmes, the CCC has significantly advanced the institutional and procedural capabilities of national competition authorities within Member States. In ECOWAS, ERCA intends to do the same. ERCA has designed a curriculum to aid capacity building in Member States and intends soon to roll out training for competition authorities in Member States. ERCA is also in the process of reviewing the laws of Member States with the aim of modifying, updating and harmonising the laws with ECOWAS instruments.

The role of legal practitioners in advancing predictability

The legal profession plays an indispensable role in fostering certainty in competition regimes. Where legislative gaps or ambiguities exist, lawyers can help shape outcomes through constructive dialogue with regulators, the provision of legal opinions and, where necessary, litigation. Judicial pronouncements in precedent-setting cases also serve as catalysts for regulatory reform or prompt reconsideration of administrative decisions.

In summary

Recent regulatory developments across Africa — especially those spearheaded by regional authorities — reflect an encouraging recognition of the critical role predictability plays in attracting and sustaining foreign investment. For legal practitioners, investors and regulators alike, this evolution signals a shared commitment to creating a more stable, transparent and investor-friendly competition law environment on the continent.

Nazeera Mia is a Knowledge Lawyer | Bowmans

This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

DealMakers AFRICA is a quarterly M&A publication
www.dealmakersafrica.com

Ghost Bites (Brait | Metrofile | Renergen)

The Finance Ghost
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Ghost Bites (Brait | Metrofile | Renergen)

At Brait, Virgin Active is less dumbbell, more belle of the ball (JSE: BAT)

Things are finally on the up for the gyms

The Brait share price chart has to be seen to be believed. In fact, if you really feel like a challenge, try get one of those fancy exercise bikes to match the gradient of your cycle to the profile of this chart:

I feel tired just from looking at it.

But hidden inside that absolute mess is the performance over the past 12 months, with Brait enjoying some excellent momentum:

The results for the year ended March are a strong indication of why the chart is looking so much better. Virgin Active (62% of Brait’s assets) and Premier (32% of Brait’s assets) are doing the heavy lifting, pun shamelessly intended.

Virgin Active’s revenue increased by 13%, with positive contributions from both volumes and pricing. This is more than good enough to drive EBITDA margin higher, assisted by cost decisions like the absolutely tiny television on the wall at my local gym. Football highlights look like a group of ants on the grass on that thing. It seems to work though, with a 45% increase in EBITDA. Jokes aside, they do note a significant refurbishment programme at their gyms – I just can’t see any evidence of it at mine.

Virgin Active is far more than just a Fourways boet factory. Southern Africa is only 35% of group revenue, with Italy contributing 27%, the UK at 24% and Asia Pacific at 14%. Most regions are doing well, with the exception of Australia where they’ve now changed the management team.

As a big fan of Kauai’s offering, I’m not even slightly surprised that their revenue is up by 37%. Kauai is consistently excellent and by far my favourite choice for a healthy, convenient meal. EBITDA for the chain is up by 25% though, so there’s some margin pressure coming through there.

I thought that this slide from the results presentation tells an excellent story of the impact of the pandemic on Virgin Active and how well the recovery is going:

We have to give Premier a mention, even though that group is separately listed these days. With revenue growth of 7% and EBITDA growth of 15%, Premier has been an excellent performer. The Premier share price has literally doubled over the past 12 months, doing wonders for the Brait look-through valuation.

New Look in the UK is still a reminder of the bad old days of Brait, with a 4% drop in sales and a 3% decrease in gross profit. The UK retail fashion industry seems to be far too difficult to really be worth it. Brait is looking to sell the business and is transitioning it from an in-store to online focus.

With all said and done, the net asset value (NAV) per share at Brait increased by 6% (adjusting for the recapitalisation) to R3.06. Brait is trading at R2.18, so that’s a 29% discount to the reported NAV per share. By investment holding company standards, that discount is on the low side. This means that the market is giving more credit to Virgin Active’s valuation than before (despite the meaty forward EBITDA multiple of 9x), with the group also enjoying the value unlock of having separately listed Premier and sold down a part of that stake.

Notably, New Look’s valuation has dropped so severely that the business is now just 3% of Brait’s total assets (vs. 7% in the comparable period). Brait didn’t participate in the recent equity injection in that company, so they’ve finally stopped throwing good money after bad.

It’s great to see so much improvement at Brait, with the next obvious catalyst being the potential separate listing of Virgin Active.

Metrofile is still in the “will they / won’t they” bucket (JSE: MFL)

The company has released a further cautionary announcement

Back in March this year, Metrofile released a cautionary announcement in which they indicated that discussions were in progress regarding a potential acquisition of the company. Metrofile has been down this road before, although it was becoming harder to find people who believed that the day for a deal might actually come.

The cautionary announcement certainly breathed some life into the share price:

Here’s the more important view though, demonstrating why it was becoming increasingly difficult to find Metrofile bulls:

After the initial announcement in March, there was a further announcement in May that confirmed that a single party was negotiating with Metrofile and was ready to commence with a high level due diligence.

The latest cautionary announcement is lighter on details, merely confirming that discussions are ongoing. Shareholders must continue to wait with bated breath.

Another stop-start quarter at Renergen (JSE: REN)

Will ASP Isotopes be able to improve these operations?

The latest quarterly update at Renergen is another example of stop-start operations. On the LNG side, production dipped from 1,371 tons to 1,311 tons quarter-on-quarter (a 4.4% drop, despite the announcement calling this “steady” production). The all-important helium business sold precisely one dewar to a customer before halting production to look for an optimised filling solution. They believe that this has been achieved and that helium filling will resume in due course.

So, it’s much the same as usual then – the resource is there, but it’s difficult to monetise. This is of course the opportunity for ASP Isotopes, as they will look to come in as strong engineering operators.

In this quarter alone, Renergen burnt through R88.5 million in cash through operating activities and another R78.5 million through investing activities. The only reason why the cash balance has jumped from R28 million to R152 million is because of the R290 million net inflow from financing activities.

Above all else, Renergen is a case study in how any asset with a weak balance sheet can become a sitting duck for a plucky acquirer. In my view, Renergen was headed for business rescue if not for the ASP Isotopes deal and associated capital injection.

Nibbles:

  • Director dealings:
    • Three directors of Lucky Star, the all-important subsidiary of Oceana (JSE: OCE), received Oceana shares linked to share-based awards. One of the directors only sold the taxable portion and retained R1.8 million in shares, while the other two directors sold the entire awards worth R5.3 million in aggregate.
    • Santam (JSE: SNT) announced some director dealings. Although there are a few nuances here, including minimum shareholding requirements and sales to fund the tax on awards, there’s also an outright sale of shares worth R584k by the company secretary.
    • SA Corporate Real Estate (JSE: SAC) also has a variety of director dealings, including sales to fund taxes and the acceptance of new awards. There was some selling of shares in excess of the tax though, including the CFO selling 72.5% of the vested shares (a total trade of R3.6 million) and the company secretary selling the full award (R1.1 million).
    • The CEO of Spear REIT (JSE: SEA) bought shares for himself and his minor children worth around R105k.
    • A director of Finbond (JSE: FGL) and his associate bought shares worth R84k.
  • Grindrod (JSE: GND) announced that Xolani Mbambo is stepping down as CEO with effect from 31 December 2025. He’s been with the group for 12 years and the recent strategic initiatives really have cleaned up and focused the group for the next chapter of its growth. At this stage, his successor has not been named.
  • Hammerson (JSE: HMN) had very little uptake for its dividend reinvestment plan alternative, with most shareholders choosing to receive cash instead. Holders of just 1.17% of shares on the UK register and 1.14% of shares on the SA register elected to reinvest their dividends in shares.
  • Anglo American (JSE: AGL) has made some changes to its executive team following the demerger of Anglo American Platinum (now called Valterra Platinum). They are taking the opportunity to appoint Ruben Fernandes as COO for the group, with Themba Mkhwanazi (currently the Regional Director – Africa and Australia) stepping down at the end of June after 11 years with Anglo American. For now at least, Al Cook (CEO of De Beers) is part of the top structure, but we know that Anglo is actively looking to offload that asset. Notably, Mkhwanazi is also stepping down from the board of Kumba Iron Ore (JSE: KIO) where he was Anglo’s representative, with Fernandes taking up that directorship.
  • In another great show of AYO Technology’s (JSE: AYO) attention to detail, the company had to release an announcement correcting the calculation for the total number of shares outstanding for purposes of the Sekunjalo offer. Sigh.
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