IDC denies Wesizwe shares discount

[] — Government-owned industrial lender, the Industrial Development Corporation (IDC), has shed some light on its involvement in a series of transactions that led to the controversial sale of Wesizwe Platinum shares belonging to the Bakubung community, a poverty-stricken North West tribe.

“The IDC paid a premium on the shares,” said Abel Malinga, IDC’s head of mining and beneficiation.

He said the IDC bought the Wesizwe shares worth R296m, which were housed in two special purpose vehicles (SPVs) – Hippo Mining Ventures (HMV) and African Continental Resources Ventures (ACRV). Private equity and investment firm Musa Capital, which created the SPVs, advised the Bakubung tribe on the deals.

“The purpose of the investment in ACRV and HMV was to enable them to purchase an equity stake in Wesizwe and enable the community to realise value upfront instead of maybe receiving a dividend in 2021 if the Wesizwe project was to be implemented as per the original plan,” Malinga said.

He said the IDC injected the funding into the SPVs in March last year and that proceeds from the planned mine would eventually repay the financer’s equity investment.

“Should this development not materialise, the IDC will pursue its rights in terms of agreements with the relevant parties,” he said.

A source familiar with the transactions said the Bakubung tribe raised R200m from a separate SPV, Newshelf 925, which was funded by German lender Deutsche Bank.

This week the bank declined to provide details about the deal.

Corporate affairs director at Deutsche Colin Brown said: “We have cooperated with (audit firm) KPMG and will provide our full cooperation to the court.”

Margaret Monnakgotla, who claims to be acting for the Bakubung royal family, ordered a KPMG probe into the sale of the shares. She is currently embroiled in a legal dispute over the Bakubung throne with her younger brother, Ezekiel Monnakgotla, who has been acting chief since 2003. Whoever prevails will control the tribe’s assets in Wesizwe.

The KPMG probe has raised suspicion that Bakubung’s shares in Newshelf were sold to unknown investors at a discount.

KPMG claims that Deutsche Bank funded the deal to the tune of R400m and that the 70 million shares in Newshelf were put up as collateral in the event that the company defaulted.

The shares, including, Bakubung’s 44 million Wesizwe shares in Newshelf, are in danger of being attached by Deutsche if the SPV does not settle its debt in full with the lender by December.

– City Press