PIC Poised to Take Stake in Fiber Company After Deutsche Loan

JOHANNESBURG (Capital Markets in Africa) – The Public Investment Corp. is poised to take a stake in Liquid Telecom if Africa’s biggest fiber company goes ahead with a planned initial public offering, according to people familiar with the situation.

The PIC, which manages the pension funds of South African government workers, agreed to set aside funds to guarantee a $375 million loan to Liquid parent Econet Global Ltd. from Deutsche Bank AG, the three people said.

The money manager would then buy stock in Liquid when it lists, at a discount to the offer price, and that money will be used to repay Deutsche, they said, asking not to be identified as the information isn’t public.

If the listing doesn’t go ahead, the PIC will not be required to spend any money, they said. It also won’t necessarily invest all of the $375 million as the size of the share sale is yet to be decided, one of the people said. The Pretoria-based company oversees the equivalent of $135 billion.

While the deal was set in motion early last year, Liquid’s share sale was deferred due to unfavorable market conditions. Econet instead sold almost 10% of the company to development Finance Institution CDC Group Plc for $180 million as it proceeded with an expansion. An IPO is still part of the company’s plans.

Deutsche declined to comment. When asked about the deal, Deon Botha, head of corporate affairs at the PIC, said it was “party to a transaction” that went through “normal governance and investment processes.” He said terms and details of the transaction are confidential.

Liquid, which is based in Johannesburg, has about 70,000 kilometers (43,500 miles) of the network running from Cape Town to Cairo, making it the largest fiber company in Africa. Econet was founded by Zimbabwe’s Strive Masiyiwa.

Angola Central Bank Chief Vows New Rate Cuts, Slower Inflation

Angola’s central bank governor pledged to slow annual inflation to single digits by 2022 and said there’s room to keep cutting interest rates, as the country continues to struggle with the economic fallout of low oil prices and declining production.

“If we don’t manage to bring stability in terms of inflation, foreign exchange, at the end of the day we’re not building the infrastructure to promote sustainable growth,” Central Bank Governor Jose de Lima Massano said in an interview Wednesday in New York. “Given the current state of our economy, this is something we have to pursue.”

Speaking on the sidelines of the United Nations General Assembly, Massano said Africa’s second-largest oil producer is struggling to sustain its foreign-exchange reserves, which he said now sit at about $10 billion. The economy contracted for the last three years, while consumer prices rose 17.9% in August from a year earlier.

The country has embarked on a bid to ease its management of the kwanza — the worst-performing currency in Africa in 2019 — after burning through more than two-thirds of its reserves to defend it. The kwanza has lost about 17% against the dollar so far this year. The International Monetary Fund, which granted Angola a $3.7 billion, three-year loan in December, said in June a tighter monetary policy stance is needed to support the exchange rate.

‘Painful Process’
“We believe there is room to bring interest rates down so that we give a little more chance for businesses to survive,” Massano said. “We had a process of our currency being artificially valued and now you have to do something, it’s a painful process.”

The central bank is due to announce its next rates decision on Sept. 30. It held the benchmark rate in July after cutting it to 15.5% in May.

Massano said that by the end of 2021 or the start of 2022, Angola wants to see single-digit inflation. At the same time, the country is embarking on what he said was a program to reform the banking sector, which is saddled by non-performing loans, produce rather than import basic goods such as rice, sugar and beans, and privatize more than 150 companies in the next three to four years.

Source: Bloomberg Business News