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Johannesburg - Goldman Sachs Group is informally advising the National Treasury on the sale of state assets to raise money for power utility Eskom, according to a person with knowledge of the matter.
While an official adviser hasn’t yet been appointed, the investment bank is proposing ways of improving state-owned Eskom’s cash flow, including the disposal of assets owned by the utility, said the person, who asked not to be identified because the information hasn’t been made public.
Colin Coleman, managing director of Goldman Sachs in sub- Saharan Africa, declined to comment when contacted by phone on Friday. The Treasury hasn’t yet appointed any advisers, spokesperson Phumza Macanda said in an emailed response to questions.
The government is trying to fill Eskom’s R225bn cashflow shortfall as it works to build power plants to end blackouts. Finance Minister Nhlanhla Nene said in January that Eskom will get its first cash injection in June.
“The power grid has to be sorted out,” Goldman Sachs Chief Executive Officer Lloyd Blankfein told bankers and reporters in an April 22 presentation in Johannesburg. “There’s a lot of state ownership of companies that in other countries would be privately managed.”
Sale options
South Africa will probably sell its 13.9% stake in Johannesburg-based mobile phone operator Vodacom Group at first, five people familiar with the matter said in February. That’s valued at about R30bn at Vodacom’s current share price. The government also holds stakes in Sasol and Kumba Iron Ore, among others, through the state-owned Industrial Development Corporation.
The ruling African National Congress thinks Eskom should sell some equity to pension fund managers such as the Public Investment Corporation, Economic Transformation Committee head Enoch Godongwana said by phone on Friday. The Pretoria-based PIC is Africa’s biggest money manager.
Goldman Sachs has been appointed to help with the South African initial public offering of Virgin Active Holdings, BHP Billiton's so-called demerger and a review of telecommunications provider Cell C.
In the past 19 months, Goldman Sachs suffered being dumped by AngloGold Ashanti after an investor rebellion forced it to scrap a $2.1bn share sale, people familiar with the situation said in October. It also managed African Bank Investments' November 2013 rights offer, which raised R5.5bn eight months before the lender collapsed.
Country report
The investment bank produced a report called ‘Two Decades of Freedom: What South Africa Is Doing With It, And What Now Needs to Be Done’ in 2014 to mark South Africa’s 20th anniversary of democracy. Coleman presented the report to London-based think tank Chatham House, in Beijing at a gathering with the South African Embassy, and at a Cape Town event with ANC Chairperson Baleka Mbete and Economic Development Minister Ebrahim Patel.
Goldman Sachs has offices in Johannesburg and has worked on deals including advising Massmart Holdings on Wal-Mart Stores' R16.5bn acquisition of a 51% stake in the South African retailer in 2011.
