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Liquid Telecom ‘set for $375m stake’ by South African pension fund

Nic Rudnick.jpg

South Africa’s pension fund for government employees is likely to take a stake in a Liquid Telecom share offer, according to reports.

The Bloomberg news agency said three “people familiar with the situation” have told it the Public Investment Corporation (PIC) has set aside $375 million to invest in Liquid’s parent company, Econet, or in Liquid itself.

Such a large share, if it is taken up, will put in the shade the $180 million stake in Liquid Telecom taken last year by UK-based CDC, a development-oriented and government-backed investment group. Reports said that investment gave CDC a 10% stake in Liquid Telecom, which implies the PIC stake might be closer to 20%.

Liquid’s CEO Nic Rudnick (pictured) told Capacity a few weeks ago: “CDC likes to invest in high-impact companies, which is also a reflection on the impact that we are having on the countries and communities which are using our network across Africa.”

Contacted by Capacity about the report of an even bigger stake to be taken by PIC, a Liquid Telecom official said: “I’m afraid that we are unable to comment.”

There have been rumours of an upcoming Econet initial public offering (IPO) of shares for at least two years. In December 2017, Capacity reported sources close to Econet confirming that the company was considering floating its shares on the London Stock Exchange. Reports at the time suggested Econet was planning to raise $1 billion in an IPO that would value the company at $8 billion.

A year later, in September 2018, Bloomberg reported Econet saying it was in talks “that may affect its share price”, saying one person had told it “the restructuring may relate to plans for an initial public offering by Liquid Telecom”. However, in retrospect, that report might have been a reference to the CDC investment announced three months later.

The latest report says the PIC may take a stake in Liquid if it goes ahead with a planned IPO. Bloomberg is reporting that the PIC “agreed to set aside funds to guarantee a $375 million loan to Liquid parent Econet Global from Deutsche Bank”.

Bloomberg said that the PIC will be able to buy shares in Liquid at a discount. It “won’t necessarily invest all of the $375 million as the size of the share sale is yet to be decided”, said Bloomberg, citing one of its sources.