DealMakers - Q1 2022 (released May 2022)
by Marylou Greig
The top mining executives have a tough job ahead of them at the Mining Indaba, to convince astute investors that South Africa should be the preferred destination for mining investments. The release in April of the Fraser Institute's annual survey of mining companies, which measures the investment attractiveness of various mining jurisdictions, ranked South Africa as one of the 10 most unattractive mining countries in the world. This has been attributed to, among other things, red tape and bottlenecks in the application process for mining rights and permits, together with regulatory and operational challenges.
The delisting haemorrhage continues from Africa’s largest bourse with the most recent announcement being that of PSG, citing onerous listing and compliance requirements, but also what many other investment holding companies face – that of their shares trading at a significant discount to their net asset values. The JSE has been proactive in stemming the tide, releasing in early May an announcement that the Financial Sector Conduct Authority had approved amendments to the listing requirements, which, it hopes, will reduce red tape and create an enabling environment for companies listed on the JSE. In addition, it has introduced the JSE Private Placements platform, establishing a broader revenue stream by providing a digital marketplace that pairs private debt and equity issuers with investors, not just in South Africa but on the rest of the continent.
The surge in deal activity reported in Q1 2021, the result of an opening up of business after the COVID-19 lockdown, did not flow through to the current year’s Q1 numbers, as the quarter returned to its traditionally quiet period. The value of M&A transactions, including those companies with a secondary listing on a local exchange was R59,3bn off 78 deals (pg 6). Of the top 10 deals by value, six involved real estate transactions valued at c.R22bn, and real estate was by far the largest component of sector analysis at 30% of transactions (pg 10).
Equity raising during the quarter saw an aggregate of R19,9bn raised, while R36bn was paid back to shareholders by way of share repurchase programmes; most notably, Prosus, British American Tobacco and Quilter, all of which hold inward secondary listings on the JSE. The largest general corporate finance transaction by value was the unbundling to shareholders by Rand Merchant Investment of its stakes in Momentum Metropolitan and Discovery valued at R35,96bn, followed by PSG of its stakes in subsidiaries PSG Konsult, Curro, Kaap Agri, CA&S and Stadio valued at R19,56bn.
The Thorts section of the magazine carries some interesting articles this quarter, shedding light on key trends expected in 2022 (pg 102), how the State of Disaster changed dealmaking (pg 98) and opportunities arising out of conflict situations (pg 87).
With the partial relaxing of the COVID-19 restrictions, DealMakers was once again able to host its 22nd Annual Gala Awards in person. Though the numbers of those able to attend were capped, the industry made the most of the opportunity to ‘dress up’ and network once again. The photographs carried in this issue, and there are many, reflect the good vibe and energy present on the night.