News & Insights

The latest Naspers/Prosus financial results show a jump in profitability across the group’s ecommerce portfolio and Tencent growth acceleration. Commenting on News24, Peter Takaendesa, Head: Equities at Mergence Investment Managers, said that with about $10 bn available for investment, Mergence expects the group to continue to leverage AI to drive efficiencies in all their global operations. Regarding Prosus, while it has been pushing profitability in its ecommerce portfolio, it still battles with a hefty discount at which its shares trade, with its stake in Chinese tech giant Tencent overshadowing the rest of the business. However, non-Tencent assets in aggregate are now close to an inflection point as they shift into profitability. This trend together with the continuation of open-ended share buybacks should ultimately drive the narrowing of the discount to NAV.

Daily Maverick picks up the water story, outlining the challenges facing Johannesburg and the urgent need for action. The private sector can make a significant contribution, via Public-Private Partnerships, such as Mergence Investment Managers has done with SA Water Works, successfully managing the only two private water concessions in South Africa. Kasief Isaacs, Head: Private Markets, and Chito Siame, Investment Principal, at Mergence are quoted on how the PPP model could be replicated and the need to learn lessons from other geographies which are also facing water challenges.

While Virgin Mobile was perhaps South Africa’s best known mobile virtual network operator (MVNO), two new players have recently entered the market: C-CONNECT and Melon Mobile. Commenting on the development, Peter Takaendesa, Head: Equities at Mergence Investment Managers, said that the segment can expect the traditional mobile network operators to fight back aggressively at some point if MVNOs reach anywhere closer to 10% active customer market share. In addition, MVNOs will all have to find their niche when it comes to the right market fit, which includes offering value for money, if they are to make any difference in the market.

The world of AI today feels like a frontier town back in the Wild West. The atmosphere is thick with danger, opportunity and a sense of the unknown. What does the future hold for the Magnificent Seven, the group of mega cap stocks that have invested heavily in AI infrastructure? Fazila Manjoo, Portfolio Manager at Mergence Investment Managers, gives us her view in the Financial Mail.

Commenting on Anglo American’s SA divestment strategy, Izak van Niekerk, Portfolio Manager at Mergence Investment Managers, gives his views on the news of Anglo’s sale of Australian coal assets to Peabody. On convincing the market of their divestment strategy, Izak says that Anglo’s sale of the metallurgical coal business is one of many steps of the divestment strategy and likely one of the (relatively) easier steps. He thinks the big step will be the successful demerger of Anglo American Platinum which is expected by the middle of 2025 only.

Business Day takes a closer look at the R6,5bn deal where by a Harith-led consortium has bought certain assets to make the Harith infraco a powerhouse in the African infrastructure investment landscape.

Bloomberg covers the story – A group of investors led by South African private equity firm Harith General partnershas agreed to buy out an infrastructure fund with stakes in assets including Lanseria International Airport and Kelvin Power Station for R6.5 billion. The deal provides an exit opportunity for investors in the first Pan African Infrastructure Development Fund.

Commenting on the Ninety One and Sanlam transaction, Radebe Sipamla, Senior Investment Analyst at Mergence Investment Managers, gave the view that the competition authorities will need to consider the situation carefully as the market will be skewed in favour of the largest asset managers and it will be difficult for truly broad-based black-owned and managed asset management firms to compete with the scale efficiencies that Ninety One will have.

Commenting on better-than-expected Telkom results for the six months ended 30 September, Peter Takaendesa, Head: Equities at Mergence Investment Managers, said this was largely driven by market share gains in the mobile business and cost optimisation across the group. He also said that Telkom must remain disciplined with its capital allocation and focus on accelerating profitable growth in mobile and fibre. If improved operational performance is sustained over the coming years, Telkom will likely sustainably return more cash to shareholders.

The respected pan-African publication, Africa Global Funds, reports on the success of the Lesotho aquaculture project where Mergence Investment Managers (Lesotho) has increased its private equity stake on behalf of the country’s largest pension fund. Sanlei Premium Trout has recently entered the massive US export market and has made a significant impact in terms of ESG as detailed in the article. Semoli Mokhanoi, MD of Mergence Lesotho, said that Mergence is in the process of raising capital to deploy expansion and working capital to further scale up Sanlei’s operations to attract other potential customers, particularly further in the Far East as well as in the European Union.