Shanduka, MTN deal highlights SA scramble for solace in Nigeria market

South Africa strategic investment drive into Nigeria is continuing apace with the purchase of a further $335 million stake in MTN Nigeria by Shanduka Group, the investment holdings group controlled by Cyril Ramaphosa, businessman and chairman of JSE-listed mobile phone group MTN.



Analysts say it is an indication of the scramble among South Africa investors to seek solace, amid the European crisis, while at the same time increasing their intra Africa investment drive.

“The intra Africa investment drive is a strategic effort underlined by their competitive advantage,” Bismarck Rewane, CEO Financial Derivatives, told BusinessDay yesterday.

In the past few years, South African firms have been moving fast to tap into Nigeria’s huge consumer market.

Last week Rand Merchant Bank, South Africa’s second-largest financial company, got a license to operate as a merchant bank in Nigeria. The minimum capital base for merchant banks is N15 billion ($952m).

In September, Tiger Brands, another South African company in the foods business, bought 63 percent of Dangote Flour. The company has lately said it would raise its shareholding to 70 percent.

Rand Merchant Bank, in its 2012 report: Where to Invest in Africa, observed that Nigeria “has the most favourable macroeconomic backdrop for sumption spending growth.”

Nigeria’s population and pent up demand for goods and services makes investment case. From mobile phones (Nigeria’s is the largest), unbanked population (36 percent of SSA’s unbanked population are Nigerians)

The latest move by Shanduka Group Ltd whittled down Nigerian ownership of MTN Nigeria to about 18 percent.

MTN Nigeria, with over 45.6 million subscribers and an estimated market share of 48 percent, is the largest subsidiary of the MTN Group, Africa’s largest mobile network operator, and contributes about 30 percent of MTN group’s earnings.

Shanduka Group stake makes it the third largest shareholder in MTN Nigeria.

“Nigeria is the most populous country on the continent and is an important market from a consumer perspective,” said Shanduka Chief Executive Phuti Mahanyele.

The investment firm declined to say exactly how much it owns of the Nigerian unit, purchased from three private investors including private equity company African Capital Alliance.

BusinessDay analysis of the investment, however, shows Shanduka Group stake amounts to about 3.1 percent of MTN Nigeria, with the MTN Group valued at $36 billion and the Nigerian business alone valued at $10.8 billion.

The investment leaves the South African telecommunication company (MTN Group) with 78.8 percent ownership of MTN Nigeria, the second-largest shareholders are a group of Nigerian shareholders at 18 percent, while Shanduka Group has a 3.1 percent stake.

MTN Group in a 2007 private placement, sold a total of 43,024,602 “MTN Nigeria linked units” or shares at $24.56 per unit, intended to raise the Nigerian ownership of MTN Nigeria to 21.4 percent.

It was learnt that Standard Chartered alerted Shanduka Group to the opportunity and also helped finance the purchase through debt and equity.

But the deal according to the newspaper report, raises questions about corporate governance and a potential conflict of interest.

The concerns stem from Ramaphosa being the chairman of the MTN Group, of which MTN International is a subsidiary.

The $335m deal was Shanduka’s largest-ever investment outside of South Africa, its CEO Phuti Mahanyele said on Tuesday. She insisted that the deal was above board and that Ramaphosa was not directly involved in negotiating the deal.

“It was not an exclusive deal, but was put out into the open market,” Ms Mahanyele said. “The shareholding in MTN Nigeria is held by MTN International and (Ramaphosa) sits on the board of the (holding) group and was not involved (in the negotiations). “

A telecoms industry executive, who asked not be named, said it was difficult to imagine that Ramaphosa would not have been aware there were investors in MTN Nigeria who wanted to sell their stake. A corporate governance expert, who also asked not to be named, agreed that the deal raised questions.

“Shanduka should not be anywhere near MTN, end of story,” the second source said. “Ramaphosa should be aware of the conflict of interest.”

MTN Group on Tuesday refused to comment on the deal. The stake was purchased from three private investors.

Source: http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/48248-shanduka-mtn-deal-highlights-sa-scramble-for-solace-in-nigeria-market

AjanleKoko:


Source: http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/48248-shanduka-mtn-deal-highlights-sa-scramble-for-solace-in-nigeria-market

posted same thing. guess no one is interested?
very soon the 18% owned by naija men and women will be wiped out completely.
but where are all those corporate governance gurus?
all the same Cyril Ramaphosa is doing very well for himself.

mbulela:
posted same thing. guess no one is interested?
very soon the 18% owned by naija men and women will be wiped out completely.
but where are all those corporate governance gurus?
all the same Cyril Ramaphosa is doing very well for himself.

When thieving and cronyms provide better returns

mbulela:
posted same thing. guess no one is interested?
very soon the 18% owned by naija men and women will be wiped out completely.
but where are all those corporate governance gurus?
all the same Cyril Ramaphosa is doing very well for himself.

Not really an issue.
At least we have our own. Glo.
And 99 of MTN Nigeria employees are Nigerian. What more do we want from them? NCC dey collect billions in the 2.5% tax on airtime, every month.

naijababe:

When thieving and cronyms provide better returns

Haba. Who dey do thieving and cronyism?

AjanleKoko:

Not really an issue.
At least we have our own. Glo.
And 99 of MTN Nigeria employees are Nigerian. What more do we want from them? NCC dey collect billions in the 2.5% tax on airtime, every month.



Haba. Who dey do thieving and cronyism?

The ones who are meant to be doing what Cyril is doing na!

Just remembered that I was meant to send you some info, no vex o, runs lo po! I will get together and send by tonight.

naijababe:

The ones who are meant to be doing what Cyril is doing na!

$300m can't buy much in MTN. MTN must be worth at least $25bn, the Nigerian operation alone.

AjanleKoko:

$300m can't buy much in MTN. MTN must be worth at least $25bn, the Nigerian operation alone.

It is the Nigerian one he is buying into. besides, this is like top up. dude already owns shares before now.
Just a bit perplexed why someone will want to off load. abi the person wan go into oil importation (Ifeanyi Uba/Cosmas Maduka style)?

naijababe:

When thieving and cronyms provide better returns

hahahaha. thieving and cronysm bring better ROI indeed.
the big boys are tired of long grammar and all this EBITDA talk.

naijababe:
Just remembered that I was meant to send you some info, no vex o, runs lo po! I will get together and send by tonight.

You persist in chopping alone, Iya Ijebu

AjanleKoko:

You persist in chopping alone, Iya Ijebu

Look who's talking, baba olowo like you!

naijababe:

Look who's talking, baba olowo like you!

no wonder his son is nicknamed O.B.O at his nursery school.

mbulela:
no wonder his son is nicknamed O.B.O at his nursery school.

is that true, Mr Brother brother?

naijababe:

is that true, Mr Brother brother?

How now? In his school, na just people like me (aspirants) put their pickins there

AjanleKoko:
How now? In his school, na just people like me (aspirants) put their pickins there

Ok o, make una show me road o

Naijababe and Ajanle - una dey toast each other? I don't see a conversation about business.

obowunmi: Naijababe and Ajanle - una dey toast each other? I don't see a conversation about business.

Toasting no be business?

Una no go keee me for NL

AjanleKoko:

Toasting no be business?

Which kain business be dat one na

AjanleKoko:


Source: http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/48248-shanduka-mtn-deal-highlights-sa-scramble-for-solace-in-nigeria-market

The truth is Shanduka should not have come near MTN, anyway, it is just 3%, but we should not be surprised, when it moves at a geometric rate to a considerable percent, then those worries and perhaps, problems will surface.