ISSUE 2 | 2022
38
The quarter’s next biggest transaction was the acquisition by Sinomine Resource Group of the shares not already held in Bikita Minerals (Private) Ltd, the largest lithium mine in Zimbabwe, in an attempt to increase its reserve of lithium ores for a total consideration of USD 180m, confirmation of the mineral wealth that is still located on the continent. The third biggest transaction was the acquisition by The Foschini Group (TFG) of Tapestry Home Brands for USD 153m. Tapestry Home Brands includes the Coricraft, Dial-a-Bed, The Bed Store and Volpes chains and is now the cornerstone of TFG’s strategy to grow its local furniture manufacturing capacity. Of the quarter’s 17 deals, four still relate to the unbundling of non-core assets by what used to be some of the JSE’s highest performing assets. For example, Ascendis Health Ltd is still trying to repay debts incurred in a spree of what was arguably
a series of unsuccessful acquisitions and EOH Holdings Ltd is attempting to unbundle assets after a trail of corruption was uncovered in 2017 which resulted in the destruction of c.96% of its share price high.
Similar trends have been identified throughout the continent, and in Kenya for example, the latest purchasing managers’ index compiled by S&P Global and Stanbic Bank points to near-unprecedented surges in input costs and output charges that were often a direct result of the conflict 1 . Direct participants in the primary agriculture space have already started benefitting from record food prices, with producers already reporting that the average field crop revenue from farmers has risen from over the mid-ZAR 30bn (USD 2bn) to the early R50bn (USD 3bn) mark. Furthermore, the South African market is keeping a close watch on rising interest rates in the developed economies, having to carefully balance the attraction of higher interest rates in safer environments during uncertain times, with their cash-strapped consumers, most of whom have only felt the increased pressures on fuel and food prices in their monthly living expenses.
LOOKING AHEAD
Following trends which were already in play well in advance of the invasion of Ukraine, and which have since been enforced with rising commodity prices, we remain hopeful that the commodity and mineral-rich African continent will flourish, provided countries and companies can weather the storm of rising input costs until such time as a sale can be made. The Russia-Ukraine war has exacerbated trade shocks caused by the coronavirus pandemic and extreme weather. The prices of items such as sunflower oil, crude, fertiliser and wheat have all soared to record highs since the invasion began.
1 Moneyweb – “Cost pressures from Ukraine war hit African economies, data show” by Monique Vanek, Bloomberg 6 Apr 2022
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