Clearing up some myths of Sagarmatha Technologies
AFRICA’S first multi-sided platform company, Sagarmatha Technologies, is set to announce its private placement subscriptions on Wednesday, two days before it’s planned JSE listing on Friday.
Gary Hadfield, the joint chief executive of Sagarmatha Technologies and the chief executive of Loot.co.za, said to fear the unknown is to disregard the potential of the future.
This comes in the wake of negative commentary from various media houses that are in competition with Independent Media, in which Sagarmatha will have an interest post acquisition on listing date.
The media have made claims that Dr Iqbal Survé, the chairperson of Independent Media, has an ambitious plan to list the company on the JSE to raise money to settle the media group’s debt.
Sagarmatha has rubbished all these allegations, stating that while Independent Media does have debts to settle the debts are all shareholder debt.
Also, the company is ahead of schedule with its payments. Shareholder debt is generally the most junior debt in a company and since it belongs to shareholders it can’t be viewed with the same lens as bank or third party debt and the lenders also have residual interest since they are also equity participants.
Hadfield said: “Yes, there is shareholder debt in Independent Media, that is no secret.
“It was there pre-Sekunjalo with the previous Irish owners and restructured as part of the acquisition by Sekunjalo in 2013 when new equity participants came on.
“We’ve disclosed that in the pre-listing statement – not that it was a secret in any event. So, accusing us of just raising money to clear debt is in my opinion, narrow-minded.”
Sagarmatha, needs a minimum of R3 billion to list on the JSE.
TO FEAR the unknown is to disregard the potential of the future says Gary Hadfield, joint chief executive of Sagarmatha Technologies and the chief executive of Loot.co.za, on the planned listing of Africa’s first multisided-platform (MSP) Unicorn.
Some “interesting” comments have been levelled at Sagarmatha Technologies, post our announcement that we plan to list the company on the Johannesburg Stock Exchange. Before I unpack what Sagarmatha is and will do, so everyone can be on the same page, let me address the less salubrious remarks that have percolated in certain quarters in the last week.
This is not about a company that is in financial trouble needing to settle a loan. Let’s make that very clear. It’s about a future where e-commerce is driving the digital economy across Africa, supported by the broad reach of a media organisation that has deep penetration through traditional print, has a steadily growing digital audience, a logistics base and the shared vision of a management team to build, and deliver, a fully-fledged MSP. It’s about raising investment to scale businesses. So, stop silo thinking. Yes, there is debt in Independent Media. We’ve disclosed that in the pre-listing statement – not that it was a secret in any event. So, accusing us of just raising money to clear debt is, in my opinion, narrow minded and underscores just why Sagarmatha needed to go offshore to get a valuation of this complex business model in the first place – the expertise for valuing MSP resides in markets that are already receptive to and understand the model… from practice (54 percent of MSPs originate in the USA).
Hesitation MSPs are novel in Africa, so we understand analyst hesitation in this regard, but not necessarily the blinkered approach – for elucidation, perhaps refer to the likes of https://www.cnbc.com/2016/08/23/ cash-burn-companies-not-always-bad-investments-professor-says.html, or even Duncan McCleod’s article in the Sunday Times this weekend, regarding the high value of tech companies – in the long term.
For the purposes of clarification, we have a shared vision – Loot.co.za and Independent Media and all the other companies in the group. It’s not just one person’s dream to make this happen. There is a host of dedicated individuals at all levels of the business, who have tirelessly worked to bring this shared vision to fruition.
To suggest then, that so many intelligent people can be so easily duped… really? Are you saying then that those of us who have chosen to align our businesses in international investors and local financiers, are all unable to read and interpret the documentation that was needed to form the pre-listing-statement?
That they do not have a vision for Africa or how Africa and Africans can benefit from this kind of business approach? Is Sagarmatha being “attacked” for being honest?
But enough of that. Sagarmatha Technologies is the fruition of a vision that has been a long time in the making. It’s one I am personally very proud of. So, what is it and what will it do and why are investors really keen on getting involved?
To use a local and practical example, when Naspers invested in Tencent Holdings – to the tune of $32 million (R384.46m) – I wonder if they looked at the today or at the future, and whether they knew it would be one of the biggest gaming and social media companies in the world?
Did they foresee that the mobile game Honour of Kings for example, would generate the types of revenue shareholders and investors can only dream of ? One would hope they invested because they hedged a bet that there was potential. Sagarmatha has no less potential.
Look at Takealot too. It required billions of rand in funding to scale and attracted is no different.
Sagarmatha has seen the same scope for growth across Africa just as Tencent did in China. Even Jack Ma, founder of Alibaba, is eyeing Africa as an opportunity.
But heaven forbid that an African company sees the same… Let’s just sit back and let global companies launch their MSPs into our African territories.
Would it not be better for when they do come, to rather be in a position to have some interesting conversations?
Audience Sagarmatha has an audience and knows how to monetise it. In addition to the obvious businesses like our branded media (think the print titles and digital properties), our e-commerce platform and our syndication business (in 40 countries across Africa), and our logistics capabilities, we have a model that already generates rich data sets.
We also have the ability to interpret the information that we amass on a daily basis, to better serve all our customers in the ecosystem – be they consumers or businesses.
With existing proprietary technology and planned acquisitions, we see this aspect of the business being even stronger the future.
We know that Africa still faces incredible challenges to roll out digital across the continent and therefore e-commerce and m-commerce are still nascent, although mobile is accelerating beyond even the most optimistic expectations and is undoubtedly the panacea. Again, to draw a parallel with China, around 80 percent of all sales on Alibaba are on mobile – we don’t expect anything different here in Africa.
We are not expecting continental connectivity to happen overnight, but we are prepared for when it happens and even prepared to help it reach the goal of engaging and transacting with the billion and more. That’s why we have the strategic partners we do.
We are an African company that understands Africa. That is a crucial distinction.
Our audiences are key to our strategy and future growth. Sagarmatha is inclusive and resonates with a much broader demographic across all socio-economic measures. Having the right offerings is one thing, but unlocking the settlement of these prospective transactions is another.
Currently, Loot has 13 payment options in South Africa alone, but our wider e-commerce and m-commerce ventures are gearing up to embrace a host of other alternative
What everyone is missing here is that e-commerce behaves in a very different manner to any traditional business. It is not bound by the same rules and precepts – e-commerce has audience groups that also think outside of the traditional realms.
What we plan to build here is not a replication of what already exists in the e-commerce space. Sagarmatha Technologies will launch and acquire B2C verticals and build B2B marketplaces using our partner network technology and combined know-how.
Finally, let me reiterate, Sagarmatha Technologies sees this as a long-term play and has the resilience to unlock the value on our continent.
We do not fear what people say about us today, and we do not fear the unknowns of tomorrow, because we are fully prepared to realise the potential that we all know exists in Africa, from today.
Gary Hadfield is an e-commerce veteran with more than 15 years’ experience. After serving at executive levels at Kalahari from 2000 to 2010, the latter as chief executive from 2005 to 2010, he took over the reins as chief executive at Loot in 2011. In 2015, Loot was on the lookout for a strategic partner and selected Independent Media as the best fit for its business growth.