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Cape Town - Venfin, the Rupert family-controlled investment company, has placed a value of over R1bn on its 25% stake in undersea cable specialist Seacom.
Seacom provides the first terabit undersea fibre-optic cable to connect Southern and East Africa to Europe and Asia.
According to year to end-June 2009 results released this week, Venfin increased the value of its stake in Seacom from R264m last year to R1.07bn - a nearly fourfold increase in value.
This inferred a value of R4bn on Seacom, which launched its commercial service in late July this year. The launch included the finalisation of testing for Phase 1 of the cable and the interconnect to customers.
Venfin, which will soon merge with corporate cousin Remgro, cited the growth in value of Seacom as one of the main reasons for the group's intrinsic value increasing 1.2% to R7.9bn (3 036c per share).
Seacom made up around 13% of Venfin's portfolio at end-June 2009, compared with just 3.3% the previous year. If Venfin's holding in Dimension Data (which is not being merged into Remgro) is set aside, Seacom accounts for more than 20% of intrinsic value.
The latest valuation of Seacom confirms market suspicions that it will be one of the more exciting investments in the new-look Remgro.
During the year, Venfin invested an additional $34.2m in Seacom. This means the total amount invested to end-June was $67.5m (roughly R500m at Wednesday's exchange rates).
Venfin spent another $7.5m on Seacom in August, which means the group has committed the required $75m (R560m) funding to the project.
Speaking to Fin24 on Wednesday, Venfin CEO Jannie Durand stressed it was important to note that Venfin's investment in Seacom was in dollars. The rand/dollar exchange rate has been volatile of late, which obviously affects investment valuations.
But Durand said Venfin's R1bn valuation on Seacom was based on future discounted cash flows. "Previously we valued this investment at cost, but we can already see the pipeline of business coming through."
- Fin24.com
*The writer holds shares in both Remgro and Venfin
