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Bob van Dijk’s Naspers-Prosus cross-deal boosts volume of M&A transactions in Sub-Saharan Africa

The value of M&A transactions in 2021 is over four times the amount recorded in the same period last year.

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Naspers CEO Bob van Dijk.

The recent cross-deal between Dutch consumer Internet conglomerate Prosus and Naspers, its South African parent company, has boosted M&A transactions in Sub-Saharan Africa by $44.7 billion during the first nine months of 2021, according to a recent report by Refinitiv.

Refinitiv is a U.S.-British global provider of financial market data and infrastructure. It revealed that the total value of announced M&A deals with any Sub-Saharan African involvement reached $78.3 billion during the first nine months of the year.

Compared with last year’s figures, the value of M&A transactions in 2021 is more than four times the figure recorded during the same period last year and the highest first nine-month total since Refinitiv began tracking mergers and acquisitions in 1980.

Earlier this year, Prosus and Naspers concluded a deal that sets up a cross-holding structure and moves majority ownership of their international assets to Amsterdam.

The cross-swap deal valued at $44.7 billion resulted in Naspers owning a 57-percent majority stake in Prosus, down from 73.2 percent. At the same time, Prosus took up a 45.33-percent stake in its parent company.

Bob van Dijk has been the CEO of Naspers since 2014 and the CEO of Prosus since 2019. He said the transaction increases the size of Prosus’ free float and more than doubles its ownership position in the group.

However, investment managers argued that the deal could add to the complexity of Naspers and Prosus share structure without creating the implied value. 

Van Dijk said the voluntary share exchange will deliver immediate and long-term value creation for shareholders.

While the number of deals increased by eight percent over last year’s figures to a three-year high of 584, M&As involving Sub-Saharan African targets reached $61.8 billion, again lifted by the share-swap deal to a record nine-month total. 

Due to the swap deal, Morgan Stanley and Goldman Sachs Bank Europe held the top spot in the ranking of financial advisors for deals with any Sub-Saharan African involvement in the first nine months of 2021.

Since its establishment in 1915, Naspers has transformed into a global consumer Internet company and one of the largest technology investors in the world.

The group owns a beneficial 28.9-percent stake in Tencent, a Chinese Internet and media firm, through South African billionaire investor Koos Bekker.

Its stake in the Chinese firm has declined by more than 15 percent since the start of the year owing to a crackdown in China, as Chinese authorities move to regulate and control tech companies to protect customer information and curb anti-competitive practices.

Prosus shareholders benefit directly from the performance of Tencent shares through the cross deal. Tencent offerings in China include the instant messengers Tencent QQ and WeChat.

It also owns most of China’s leading music services platform Tencent Music, with more than 700 million active users and 120 million paying subscribers. In addition, Tencent’s WeChat Pay handles nearly 40 percent of the country’s mobile payments.

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Namibian tycoon Quinton van Rooyen’s Trustco wins round in court against JSE

Shares in the group rose 35.56 percent as a result.

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Quinton van Rooyen.

Trustco Group, an investment holding majority owned by Namibian businessman Quinton van Rooyen and his family, has won a round in court against the Johannesburg Stock Exchange (JSE).

The Pretoria High Court ruled that the company may not be suspended from the JSE until the hearing of its review application in September.

The presiding judge, Nicoline Janse van Nieuwenhuizen, pre-dismissed every argument made against Trustco. The judge issued a decision, in which she ordered the JSE to be interdicted and restrained from suspending Trustco shares from trading on the local bourse.

“The grounds of review are all deserving of a proper hearing in due course, and I am satisfied that Trustco has asserted a prima facie right to fair and just administrative action,” she said in her decision.

In response to the news, shares in the group rose 35.56 percent to R0.61 ($0.0367), from a price of R0.45 ($0.0271) at the start of trading this morning.

The increase in Trustco’s share price pushed its market capitalization above R985 million ($60 million) and the value of van Rooyen’s 63.94-percent stake above R630 million ($38 million).

The court also prohibited the JSE from implementing or attempting to implement the decision that Trustco restate its annual financial statements for the fiscal year ending March 31, 2019, as well as the interim results for the six months ending Sept. 30, 2019.

The legal battle between Trustco and the JSE began on Nov. 11, 2020, when the exchange’s authorities claimed that the company had not met the listing requirements for its 2019 annual financial statements and 2020 interim results.

As part of the allegations, the JSE accused Trustco of violating international accounting standards by misrepresenting features of two loans and reclassifying land that it owns.

Trustco questioned the JSE’s authority to order corporations to amend their financial statements. It claimed that only boards have that authority and stated that all transactions had been “exactly accounted for, reported, and disclosed.”

Amid the legal battle between Trustco and the JSE, wary local bourse investors sold their stakes in the company, fearing a potential delisting of its shares, which caused the share price to crash to an all-time low in July before rebounding recently by double digits.

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Ugandan tycoon Charles Mbire to pocket $1.15-million interim dividend from MTN Uganda

Mbire owns a significant 3.98-percent stake in the Ugandan telecom outfit.

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Charles Mbire.

Ugandan multimillionaire businessman Charles Mbire is on track to receive an interim dividend of Ush4.48 billion ($1.155 million) from his stake in MTN Uganda after the telecom group reported a double-digit percent increase in earnings in the first half of 2022.

MTN Uganda is Uganda’s leading telecom service operator.

Mbire, the chairman of MTN Uganda and one of Uganda’s wealthiest businessmen, owns a significant 3.98-percent stake in the Ugandan telecom outfit, which operates as the fourth operating subsidiary of the South African multinational mobile telecom company, MTN Group.

The interim dividend will be paid electronically into his bank account at a later date from the group’s retained earnings of Ush902 billion ($232.4 million) at the end of its 2022 fiscal year. It is his first dividend from the telecom company since its shares were listed more than eight months ago.

The dividend payment follows a significant rise in the group’s earnings in the first half of 2022 despite a 4.9-percent decline in voice revenue, as it looks set to replicate its stellar performance in 2021.

As a result of the company’s strong financial performance, the board of directors approved the payment of an interim dividend of Ush5 ($0.00128) per share for the six months ending June 30, totaling Ush11.95 billion ($28.9 million), which is subject to withholding taxes.

According to data retrieved from the company’s earnings report for the first six months of 2022, its profit increased by 48.1 percent to Ush193.6 billion ($50.2 million) in the first half of 2022, compared to Ush130.7 billion ($33.7 million) in the first half of 2021.

The double-digit increase in profit can be attributed to a 10-percent surge in the company’s service revenue, which was driven by a significant increase in data and fintech revenue, which were more than sufficient to offset the 4.9-percent decline in voice revenue.

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Billionaire Robert Smith’s Vista to acquire Avalara business software for $8.4 billion

Smith directs Vista’s investment strategy.

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Robert Smith.

Avalara Inc., a leading tax compliance automation provider for businesses, has agreed to be bought by Vista Equity Partners for $8.4 billion.

Vista Equity Partners is a leading global investment firm led by America’s richest Black person, Robert Smith.

The transaction received unanimous approval from the Avalara board of directors and is expected to close in the second half of 2022, subject to customary closing conditions such as shareholder and regulatory approval.

Under the terms of the deal, Vista will acquire all outstanding shares of Avalara common stock for $93.50 per share in an all-cash transaction valued at $8.4 billion, including Avalara’s net debt.

According to a source familiar with the situation, Vista has secured a total of $2.5 billion in loans from private lenders as part of the move to bring in institutional investors as co-investors.

The purchase price represents a 27-percent premium over the company’s closing share price on July 6, the last trading day prior to the announcement of the deal.

“For nearly two decades, Avalara has ambitiously pursued its vision of automating global compliance, making tax less taxing for businesses and governments around the world,” Avalara Co-Founder and CEO Scott McFarlane said.

“As a category leader, we believe that continuing to invest in innovation and experience is exciting for our customers, partners, and employees,” he said. “We are excited to work with Vista and will benefit from their enterprise software expertise as we build and improve our cloud compliance platform.”

After the conclusion of the deal, Avalara shares will no longer trade on the New York Stock Exchange. Avalara will become a private company managed by Vista.

Smith has an $8-billion stake in Vista and directs its investment strategy.

He also serves on its executive committee, the company’s governing and decision-making body for all matters affecting overall management and strategic direction. He has supervised more than 570 completed transactions, with a total transaction value of more than $265 billion.

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