PIC seeks independent valuation of Karan Beef investment

The Public Investment Corporation is in the process of getting an independent valuation for its bid for a majority shareholding in Karan Beef, the judicial commission of inquiry into the state-run asset heard on Monday.

In October, the PIC confirmed it was set to acquire a majority shareholding in Karan Beef, in a deal that was described by former CEO Dan Matjila, as "historic" and aimed at driving transformation in the agricultural sector. The deal could cost up to R5.2bn

Tshifhango Ndadza, a senior market risk analyst at the PIC, testified on Monday the deal had been presented to various PIC committees. 

“Given the valuation gap, and how the company has performed and again because of the media perception, we are now opting for a third party valuation [...] The transaction would then go through the normal process,” Ndadza told the inquiry. 

Ndadza added that the bid was currently being put through confirmatory due diligence, which is a process that is undertaken when a transaction is approved but not consummated within a six month period.

Karan Beef was established by the Karan family in 1974 and operates the largest cattle feedlot and abattoir on the continent. In October, the Karan family agreed to sell a 90% stake in the business.

Ndadza the said the Unemployment Insurance Fund and the Government Employees Pension Fund were initially going to contribute an amount of less than R2bn for the deal.

"What has changed is that the capital contribution from GEPF is going to be more than the R2bn," he said. 

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