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Johannesburg - South Africa is in talks to sell part or all of its stake in mobile phone company Vodacom Group to the Public Investment Corporation (PIC) to raise funds for the country’s power utility, two people familiar with the plans said.
While a deal hasn’t been completed, an agreement could be reached soon and the stake won’t be sold by the government at a significant premium or discount to the current share price, according to one of the people, who asked not to be identified because the proposal hasn’t been made public.
The state’s 13.9% stake is worth about R26.6bn rand ($2.1bn).
South Africa is seeking to raise funds to help plug a R225bn shortfall at electricity provider Eskom Holdings amid regular blackouts. The National Treasury said on Thursday it will wait until transactions are completed before providing details of a sale of government assets, which are needed to finance a R23bn rescue package.
“Government has not said anything about the sale of a stake in Vodacom,” Phumza Macanda, a Treasury spokeswoman, said by phone on Friday.
“Government has only said it is looking into the sale of a non-core asset.”
The PIC, Africa’s biggest money manager and owned by the South African government, already has 3.19% of Vodacom, and could become the company’s second-largest shareholder after UK carrier and 65% owner Vodafone Group. A PIC spokesperson said he couldn’t immediately respond. A spokesperson for Vodacom declined to comment.
Rescue Package
Vodacom shares pared earlier gains and traded 0.2% lower at R127.74 rand as of 4:31 p.m. in Johannesburg on Friday, valuing the company at R191bn.
Finance Minister Nhlanhla Nene this week submitted to parliament the Eskom Appropriation Bill that enables the government to allocate the R23bn rand bailout to the utility. A Vodacom stake sale could be done “at an opportune time,” Nene said in an interview with Bloomberg TV’s Anna Edwards on Thursday. Details of asset sales could be published at the end of this month, he said.
He declined to comment on whether the sale will be to the PIC when responding to separate questions later.
The PIC manages the majority of South African government worker pension funds and its investments account for about 13% of the market capitalization of stocks traded in Johannesburg, according to its website. It manages about R1.4 trillion in total.
