PIC Poised to Take Stake in Fiber Company After Deutsche Loan

27 September 2019

Mergers, Acquisitions and Financial Results

The Public Investment Corp. is poised to take a stake in Liquid Telecom if Africa’s biggest fiber company goes ahead with a planned initial public offering, according to people familiar with the situation.

The PIC, which manages the pension funds of South African government workers, agreed to set aside funds to guarantee a $375 million loan to Liquid parent Econet Global Ltd. from Deutsche Bank AG, the three people said.

The money manager would then buy stock in Liquid when it lists, at a discount to the offer price, and that money will be used to repay Deutsche, they said, asking not to be identified as the information isn’t public.

If the listing doesn’t go ahead, the PIC will not be required to spend any money, they said. It also won’t necessarily invest all of the $375 million as the size of the share sale is yet to be decided, one of the people said. The Pretoria-based company oversees the equivalent of $135 billion including stakes in many of South Africa’s biggest companies.

While the deal was set in motion early last year, Liquid’s share sale was deferred due to unfavorable market conditions. Econet instead sold almost 10% of the company to development Finance Institution CDC Group Plc for $180 million as it proceeded with an expansion. An IPO is still part of the company’s plans.

Deutsche declined to comment. When asked about the deal, Deon Botha, head of corporate affairs at the PIC, said it was “party to a transaction” that went through “normal governance and investment processes.” He said terms and details of the transaction are confidential.

Liquid, which is based in Johannesburg, has about 70,000 kilometers (43,500 miles) of network running from Cape Town to Cairo, making it the largest fiber company in Africa. Econet was founded by Zimbabwe’s Strive Masiyiwa.

Source: Bloomberg