Clipped wings
The prolonged travails of unviable SA Airways (SAA) do prompt, on occasion, the contention that much-needed corporate and operational realism will only be possible if control over the national carrier passes into the hands of a private-sector operator or investor.
It’s interesting, then, to note that Maun-based safari and tourism conglomerate Wilderness Holdings — which has a secondary listing on the JSE — has shied away from participating in the privatisation of Air Botswana. It turns out that Wilderness got word from Botswana’s ministry of transport & communications that the government wished to enter into discussions around Air Botswana. However, “after careful deliberation”, Wilderness indicated it would not pursue the privatisation matter, tactfully wishing the Botswana government and airline well in their efforts to achieve a turnaround.
Wilderness operates in an exciting tourism niche, and shareholders must be fairly content with recent profit performances and dividend flows. Perhaps contending with a notoriously difficult airline turnaround situation might have proved too much of a distraction. Or was there a realisation that other acquisitions could be pursued without overstretching the balance sheet? Still, I have to wonder if any Jse-listed counters would respond with any degree of enthusiasm to an invitation in the unlikely event that government decided to privatise or part-privatise SAA.
That option has probably long flown out the window. Maybe a decade ago mobility conglomerates like Imperial or Bidvest might have been contenders . . . and the taxpayer’s burden would have been lifted.
Spac to the drawing board
Special purpose acquisition companies (Spacs) are intriguing beasts, being set up as effective cash-drenched investment counters with a reasonable deadline to make viable, unlisted investments.
It appears, though, that deal making is not always as easy as initially anticipated.
Last week, M-fitec International, which targeted acquisitions in the fastgrowing fintech sector, capitulated in its efforts to collect viable assets; it will now return capital to shareholders.
It is the second Spac to throw in the towel after Vivian Imerman’s Sacoven, which focused on the consumer sector, closed shop. M-fitec cited the prevailing unfavourable sentiment in the market towards small-cap listed stocks, the lack of liquidity in its shares, the current state of the SA market, a lack of ability to raise capital at a fair share price, and inability to mobilise its shares as currency.
Hopefully, the handful of determined Spacs — or, rather, former Spacs — on the JSE will continue to rack up huge success in their endeavours.
The battery is not dead
Shareholders in fizzled independent power provider Ipsa got a pleasant shock when unlisted Uk-based power utility Encor Power Plc made an offer for the entire issued share capital.
At last count, Ipsa was selling off its remaining assets to settle up with creditors — events unlikely to whip up an optimistic froth.
Encor will pitch a share swap takeover offer. This means Ipsa shareholders will receive shares in Encor, which is planning to list on the London Stock Exchange later this year.
From what I can ascertain, Encor is a fairly new entity. Its subsidiary, Demand Power, plans to offer distributed power generation and grid management services. Documentation shows Encor holds options to acquire leases over eight sites on which generation facilities can be built and connected to the grid.
In short, Ipsa shareholders — if they back the Encor deal — will be staring at blue sky rather than tangible operational results. This is, I suppose, better than a kick in the pants — but I suspect Ipsa shareholders will be called on sooner rather than later to stump up capital to get Encor operationally switched on.
I have to wonder if Jse-listed counters would respond with enthusiasm to an invitation if government decided to privatise SAA