Politics stalls Tokyo’s Avusa bid

2012-08-11 15:35

Mvelaphanda insiders allege ANC faction fights are the obstacle

Individuals with business interests in Mvelaphanda allege that the state-owned Public Investment Company (PIC) is stalling on Mvela’s acquisition of media group, Avusa, to allow entities friendly to President Jacob Zuma time to raise cash to buy the group.

Though they named a prominent business entity believed to be close to Zuma, City Press has opted not to name the company because it had not had time to respond to the allegation that it too was bidding for Avusa.

A business-political tussle has emerged since it became known that Independent Newspapers and Avusa assets were up for sale.

Empowerment company Sekunjalo has openly expressed its intention to acquire Independent Newspapers.

Former ANC general-secretary and current head of the party’s disciplinary appeal committee, Cyril Ramaphosa’s Shanduka company has been linked to the Independent Newspapers grab, although the company has denied an interest in the troubled media company.

The Mvelaphanda Group’s disposal of its non-media assets and its audacious R3 billion bid to control Avusa Media has raised speculation that presidential hopeful Tokyo Sexwale is planning to use the media conglomerate to further his political ambitions.

Sexwale is no longer actively involved in the company since joining the government in 2009 as Human Settlements Minister.

Up to now, Mvelaphanda’s bold attempt to control Avusa – the owner of publications like the Sunday Times, Business Day, Sowetan, and TV channel Summit TV – has hit a brick wall after the PIC blocked the deal.

Mvela insiders believe that the PIC’s decision was politically motivated and accuse it of trying to keep the media group away from Sexwale, who is in a camp that wants to unseat Zuma.

“The Mvela deal (to acquire Avusa) is already fully funded. They don’t even have to tap into the Batho Bonke windfall. They have already raised the money from financial institutions,” said an Mvela insider speaking on condition of anonymity.

PIC chief executive Elias Masilela and spokesperson Nomzamo Petje’s phones were off for most of Friday and by the time of going to print they had not responded to text messages requesting comments.

Last week, City Press reported that the Mvela-controlled empowerment group Batho Bonke is planning to cash in its 3.9% stake in Absa.

Some sources believe Avusa has become a battleground for the ANC presidential succession race between Zuma and Sexwale, who is rumoured to be ganging up with Zuma’s deputy, Kgalema Motlanthe, to unseat the president.

The PIC, which owns 17% of Avusa, is not blocking the deal on the grounds that Mvelaphanda’s offer was woefully inadequate.

Instead it is arguing that Avusa is underperforming and efforts must be focused on turning it around.

The South African Communist Party (SACP), which is known to be backing Zuma for a second term, is also vehemently opposed to Sexwale’s investment vehicle controlling the media house.

But SACP spokesperson Malesela Maleka denied that its opposition to the transaction was political.

“This is not about Tokyo (Sexwale) . . . We are a class organisation and it is dangerous for the media to be owned by a few people, black or white,” he said.

Mvelaphanda’s ambitious plan to control Avusa may raise a political struggle similar to Italy’s, where opposition parties criticised former Prime Minister Silvio Berlusconi for using his influence to win elections.

Mvelaphanda, which owns about 28% of Avusa, is no longer pursuing new acquisitions and has instead embarked on a strategy to unbundle or sell off old investments and return cash to its investors.

The disposal of the investments will result in the company being a shell which will be delisted from the JSE.
 
In February, the company said R129 million flowed into its coffers after it disposed of some of its investments.

One of those investments was a 12.3% stake in telecoms company Vox Telecom, which it bought in 2007.

In 2010, Mvela unbundled its investments to shareholders in listed hospital group Life Healthcare and Mvelaserve, a provider of outsourced business support services.

Earlier this year, stockbroking firm Legae Securities noted that Mvela’s net assets were worth R2.2 billion including R193 million in cash.

The crown jewel in its portfolio is its stake in Absa, which the stockbroking firm said was worth R1.23 billion, followed by investments in Life Healthcare (R302 million) and publishing and entertainment group Avusa (R236 million).

Mvelaphanda holds a 2.28% stake in Absa through its 47% stake in Batho Bonke, which in turn owns 3.9% of Absa, South Africa’s largest retail lender.

The company and 1.2 million other black investors are also looking to cash in their Batho Bonke shares, valued at R2.2 billion after capital gains tax is paid.

Media reports suggest the company is also planning to offload its empowerment stake in construction group Group Five.


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