Vodacom plans R17.5bn share sale to raise black stake

By Loni Prinsloo

(Bloomberg) – Vodacom Group Ltd. proposed raising the share of black shareholding in Africa’s largest wireless carrier by selling a stake of as much as 6.35 percent to investors including Royal Bafokeng Holdings Ltd., Thebe Investment Corp., YeboYethu Ltd. and company staff.

A logo sits on display outside the headquarters of Vodacom Group Ltd. in Johannesburg. Photographer: Dean Hutton/Bloomberg

The R17.5 billion ($1.3 billion) deal will help Vodacom comply with a government initiative to raise the share of the company that is owned by blacks. After the transaction, about 20 percent of Vodacom will be controlled by black investors. Vodacom’s existing empowerment deal ends on Oct. 8. As part of the deal, current black shareholders will swap their stock in the South African unit of Vodacom for a stake in the total group.

“Our black shareholders wanted exposure not only to have exposure to the South African operations, but also to our international operations,” Chief Executive Office Shameel Joosub said on a conference call on Monday. “By black shareholders holding a stake in the larger group it will also provide better pricing transparency.”

Shareholders will have to approve the transaction, the company said. The final pricing of the deal will be confirmed in early July and the sale will take place in September, Vodacom said.

Vodacom shares fell 2.6 percent to R140.35 at 11:05 a.m. in Johannesburg, giving the company a market value of R242 billion.

“There are some shareholders selling out because of the dilution that is a result of the empowerment deal,” Petri Redelinghuys, founder of Herenya Capital Advisors said by phone from Cape Town. “I do not think it will have a long-term impact, but it is worrisome if the shares go below R140 a share.”

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