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Vodacom plans US$1.3B share sale to raise black stake

Vodacom Group Ltd. proposed raising the black-owned shareholding in Africa’s largest wireless carrier by selling a stake of about 6 percent to certain investors and employees.

The 17.5 billion-rand ($1.3 billion) deal will help Vodacom comply with a government initiative to raise black ownership in Africa’s most industrialized economy, part of ongoing efforts to redress inequalities originating from white-minority rule. After the transaction, about 20 percent of Vodacom will be controlled by black investors, led by YeboYethu Ltd.

“The deal will allow black shareholders to get some cash in their pockets after being invested in Vodacom for the past decade,” Craig Gradidge, head of investments at Johannesburg-based Gradidge Mahura Investments, said by phone Monday. “That’s a decent reward, and it also allows black shareholders to participate in the group structure going forward.”

As part of the deal, current black shareholders will swap their stock in Johannesburg-based Vodacom’s South African unit for a stake in the total group, which also includes operations in Kenya, Tanzania and the Democratic Republic of Congo. Vodacom is about 65 percent owned by Newbury, England-based Vodafone Group Plc.

International Exposure

“Our black shareholders wanted exposure not only to the South African operations, but also to our international operations,” Chief Executive Officer Shameel Joosub said on a conference call on Monday. “By black shareholders holding a stake in the larger group it will also provide better pricing transparency.”

Investors will have to approve the transaction, the company said. The final pricing of the deal will be confirmed in early July and the sale will take place in September, Vodacom said.

The shares declined 2.1 percent to 141.49 rand at 1:06 p.m. in Johannesburg, having earlier fallen to an almost six-month low.

“There are some shareholders selling out because of the dilution that is a result of the empowerment deal,” Petri Redelinghuys, founder of Herenya Capital Advisors said by phone from Cape Town. “I do not think it will have a long-term impact, but it is worrisome if the shares go below 140 rand a share.”

Source: Bloomberg

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