Company news in brief

Growthpoint running out of diesel

Growthpoint Properties, South Africa’s largest real estate investment trust, said its running out of diesel to operate generators at some of its buildings as the country grapples with the worst electricity shortage since 2019.

In a letter to customers at one of its sites in Johannesburg the company said it suppliers are struggling to keep up as Eskom Holdings, the national power utility, cuts as much as 6 000 megawatts from the national grid after a pay strike disrupted operations.

"Our resources are stretched to their limits. Our diesel providers have exhausted their diesel supply," the company told clients in a letter dated Tuesday. "We kindly request that you make your own contingency plans to secure the integrity of your business and IT infrastructure."

The inability of diesel supplies to keep up with demand is another indication of the impact the power cuts are having on the South African economy, which has been subjected to intermittent outages since 2008 as Eskom struggles to meet demand.

"It’s creating a huge crunch in the whole economy," said Craig van Zyl, Growthpoint’s national facility manager, by phone. He said contingencies are being put in place. - Fin24/Bloomberg

Futuregrowth plans R600m fund

Futuregrowth Asset Management, a South African fixed-income money manager with R193 billion of assets, is raising a fund to invest in startups with a strong developmental impact.

The company aims to raise as much as R600 million for the Futuregrowth High Growth Development Equity Fund - a closed-ended, limited-life fund - by the end of the year, according to a statement from Futuregrowth. For the money manager’s Cape Town-based Chief Investment Officer Andrew Canter, South Africa’s second-largest city offers ample opportunities for investment.

"There are some real hives of activity going on out there," Canter said in an interview in Bloomberg’s Cape Town office, adding that he has seen lot of business action while cycling 30 kilometers to work and back. Futuregrowth has invested in companies such as financier of small firms, Retail Capital, which Canter has observed while on his ride to work.

Futuregrowth joins investors such as Naspers in backing startups, which are seeing a revival in Africa’s most-industrialized economy. Early-stage firms attracted more than R12 billion in venture capital last year, a ninefold increase since 2016. To tap the opportunity, Naspers set up Naspers Foundry, which invests in early-stage firms.

Futuregrowth, backed by Old Mutual Ltd., has a 16-year-old Development Equity Fund with R3.4 billion under management that has included about 10 early-stage investments and "can see it works," Canter said. The fund that’s being launched has a broad mandate that covers infrastructure, social services, clean power, agriculture and regional development. - Fin24/Bloomberg

Exxaro warns of poor rail performance

Exxaro Resources, one of Eskom's largest coal suppliers, is expecting the export price of coal to increase by almost 80% in the first half of the year. But poor rail performance has meant that exports declined, despite high international demand.

"Our domestic and export flows remain severely impacted by logistical constraints and it continues to impact our ability to move coal to customers and ports," it said in an update to shareholders on Thursday.

Coal experts were down 27% in the first half of 2022 compared to the second half of 2021.

"Despite the current challenges, Exxaro is successfully pursuing alternative markets and logistic channels to realise value for our business."

It now expects to export a total of 6.2 million tons of coal in 2022, against an initial export guidance of 7.6 million.

Exxaro said it expected the benchmark API 4 coal expert index to average $270 per ton for the six months ending 30 June, compared to $151 per ton in H2 2021.

"The Russia-Ukraine war and Europe’s quest for alternative suppliers of especially high-quality thermal coal continues to drive the shortages. Extremely high and volatile prices were recorded during 1H22." - Fin24

PIC indecision in RBPlat battle causing delays

Impala Platinum said Africa’s biggest fund manager must make a decision over what to do with its Royal Bafokeng Platinum stake, which has become central to ending an eight-month takeover battle that's hindering the companies from making future plans.

The Public Investment Corporation (PIC), which owns 9.9% of RBPlat, according to data compiled by Bloomberg, has had enough time to weigh Impala’s’ R150 rand per share offer, Nico Muller, Impala’s CEO said. A decision on its stake in the smaller miner would help bring certainty to both companies, he added.

While Impala’s bid to win control of RBPlat has been frustrated by an attempt by rival Northam Platinum to also take over the company, the PIC’s indecision is stoking investor uncertainty while delaying the companies from taking strategic decisions, Muller said.

At stake for Impala is control of assets owned by RBPlat that lie close its own mine complex near the South African city of Rustenburg. Rival Northam swooped in and gained a key stake after buying out RBPlat’s biggest shareholder in November. Since then, Impala has built a 37.8% stake in RBPlat but its bid to complete antitrust approvals and complete the takeover process was delayed after Northam, which owns just under 35%, intervened in an attempt to block the deal.

Muller reiterated that RBPlat’s assets are key to the future of Impala’s biggest mine complex, which employs almost 44 000 people. Some of the deep-level shafts at the sprawling Rustenburg operation are running out of commercially viable ore and could only be profitable if exploited alongside RBPlat’s neighboring assets, Muller said. He added that while Impala respects the money manager’s decision-making processes, he is "disappointed" that a decision hasn’t been announced eight months after his company’s offer. - Fin24/Bloomberg