[miningmx.com] – SHANDUKA is to combine its interests with Pembani Group, owned by entrepreneur Phuthuma Nhleko, in a proposed transaction that creates a R13.5bn mining and industrial group, and allows Cyril Ramaphosa to bring the curtain down on 13 years in business.
Ramaphosa, who founded Shanduka in 2001, was last night confirmed as deputy president of South Africa by president Jacob Zuma.
Details of the Shanduka and Pembani combination, including who will number among its executives, and whether the combined entity will restructure ahead of a possible listing, are sketchy at present. Nhleko, who is chairman of Pembani, will chair the combined company.
“The focus was on making the announcement owing to the fact Cyril Ramaphosa is now deputy president,’ said an adviser to Shanduka.
It is anticipated that the deal will be consummated at the year-end, but there appear to be some deal complexities, mostly over relative shareholdings, although at a valuation of R8.8bn in January, Shanduka is the dominant partner.
Shanduka has Chinese sovereign wealth fund, China Investment Corporation (CIC) as a shareholder after it bought a combined 25.73% in the company which is held through Jadeite Ltd. Standard Bank owns just under 13% while Ramaphosa’s trust, Tshivihase remains the largest shareholder with a 29.6% stake worth about R2.2bn.
Said Ramaphosa: “It enables me to leave Shanduka and eliminate any conflicts of interest confident that its founding vision of value creation, empowerment and transformation will continue through the new entity.’
The transaction was the culmination of a review of Ramaphosa’s business interests which was started soon after he was elected deputy president of the African National Congress, South Africa’s ruling party, in December 2012, he said.
Nhleko, who was formerly CEO of telecoms group, MTN, and now its non-executive chairman (replacing Ramaphosa), said that the proposed transaction was a “logical’ one.
“The combined entity will benefit from a strong capital base and it will continue to build on the individual platforms created by Shanduka and Pembani in the past,’ he said. The companies said they would seek opportunities in sub-Saharan Africa.
What’s noticeable about the two companies is a strong presence in the energy markets, among others. Pembani has investments in Engen, BHP Energy Coal South Africa, and Exxaro Resources while Shanduka is in joint venture with Glencore on South African coal assets.
There are bits and pieces in Shanduka in particular that if retained in the combined entity would make it look unfocused and an illogical fit with Pembani. For instance, Shanduka has interests in property as well as MacDonald’s and Coca-Cola Shanduka Beverages.
All in all, Shanduka has 20 separate investments, although as early as December 2012, Shanduka CEO, Phuti Mahanyele acknowledged a restructuring was likely ahead of a possible listing.
Pembani is the rebranding of Worldwide Africa Investment Holdings, the investment vehicle Nhleko founded in 2004 and which he used to buy a stake in MTN, as well as control of Afrisam in 2011 in conjunction with the Public Investment Corporation.
Nhleko still owns a stake in MTN but recognised R424m in shares shortly after leaving the company in 2010. He was appointed to Anglo American’s board in 2009.
