No country for hustlers: why unleashing the informal sector is South Africa's missing revolution
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Daily Maverick
11 hours ago
- Daily Maverick
Who will steer the R55bn marriage of MultiChoice and Canal+?
There's a new power couple in African media. After nearly five years of courting, Canal+ has finally put a ring on MultiChoice to form a pan-African content colossus with global ambitions. French media titan Canal+ has secured the final go-ahead to acquire MultiChoice in a landmark R55-billion deal. After years of quiet manoeuvring and regulatory hurdles, the merger is now a question of who controls what. The Competition Tribunal's conditional approval, granted late last week, closes the chapter on a five-year 'creeping takeover' and opens a new era in African broadcasting. Now it's a balancing act weighing foreign capital with national sovereignty on a digital scale with local content. Enter the media monarchy In return for its princely sum, Canal+, owned by the French conglomerate Vivendi, gets access to MultiChoice's 14.5 million Anglophone and Lusophone subscribers, the DStv powerhouse, sports juggernaut SuperSport, and a foothold in streaming via Showmax. MultiChoice, facing rising costs and subscriber declines, finds itself rescued by a suitor with deep pockets and pan-African ambition. Combined, the merged entity will serve more than 24 million subscribers across 50 countries — instantly becoming the largest pay-TV and streaming provider on the continent. However, if Canal+ was hoping for free access, South African regulators had other plans. The deal's approval came wrapped in layers of red tape — not as a deterrent, but as a deliberate design feature. Transformation goals Central to the regulatory conditions is the creation of LicenceCo, an independent company that will hold MultiChoice South Africa's broadcast licence. It will be majority-owned and controlled by historically disadvantaged South Africans and employees. Crucially, Canal+ has no control and no board seats. This structural firewall protects South Africa's legal requirements around media ownership, ensures transformation goals are met and serves as a template for foreign investment in other sensitive sectors. Phuthuma Nathi, the B-BBEE shareholder darling, increases its economic interest in LicenceCo to 27%, with a new employee trust added. The licence, and the local airwaves it governs, stay South African. The R30bn lobola The Competition Tribunal didn't just demand structural separation; it also extracted a commitment package valued at more than R30-billion. This includes: A three-year moratorium on retrenchments linked to the merger; Significant investment in local content production, sports broadcasting, SMME procurement and Corporate Social Investment programmes; Ongoing free-to-air broadcast access for key sporting events, safeguarding the public's ability to view major matches without a subscription; and Local skills development through Canal+'s 'University Programme', to train historically disadvantaged individuals in broadcasting and production. In a media environment where Netflix and Amazon Prime are increasingly dominant, this local-first approach is designed to future-proof South African media. Showmax, SuperSport and scale Behind the regulatory muscle lies a clear commercial imperative. MultiChoice has struggled in recent years, shedding 2.8 million linear subscribers and burning cash to prop up Showmax 2.0, its streaming reboot built on Comcast tech and bolstered by NBC Universal's 30% equity stake. Canal+ brings financial stability and scale. It also inherits Irdeto, MultiChoice's profitable cybersecurity unit, and Showmax's potential to become Africa's answer to global streamers. Vivendi, Canal+'s parent company, views this merger as critical to its own transformation and part of a plan to split into three listed entities, with Canal+ as its global growth engine. Listing Canal+ on the JSE within nine months of deal completion is a further nod to local inclusion, visibility, and capital market confidence. The shiny ring can't cover controversial holes While South Africa celebrates a structurally sound deal with tangible local benefits, not all observers are convinced. Critics warn that Canal+'s track record and the Bolloré Group's 30.4% stake in it come with baggage. Vivendi's past includes one of the largest corporate losses in history and regulatory infractions that still cast a shadow. Vincent Bolloré, the billionaire behind the curtain, faces corruption charges in France and has been accused of turning Canal+'s French media outlets into right-wing political mouthpieces. With Canal+ now embedded in South Africa's broadcasting ecosystem, some fear creeping influence over editorial independence, particularly if there are future attempts to deepen ownership or control beyond the current firewall. Marriage isn't buying a horse Mergers are easy to announce but hard to manage. However, the competition bodies have played their hand cleverly — extracting commitments, safeguarding jobs and setting a precedent for how global capital must behave when it enters South Africa's strategic sectors. The long-term test lies ahead. Can Showmax truly compete with Netflix? Can SuperSport keep its sports crown as global streamers outbid for rights? Will LicenceCo be a transformative force or a regulatory box-ticker? Will Canal+ respect the firewall, or try to chip away at it over time? The merged entity is now king of the hill in African broadcasting, but it's a kingdom that won't run on size alone. Trust, execution and transformation will be the currencies of success. DM
Daily Maverick
11 hours ago
- Daily Maverick
The Finance Ghost: The battle for MAS is over – now begins the war?
With Hyprop terminating its bid for MAS Real Estate, Prime Kapital has won the first skirmish. But the war is in its early stages… MAS Real Estate is the company that nobody expected to become the juiciest M&A story on the JSE this year. All the ingredients are here – big hitters on either side of the table and a board in the middle that is coming under increasing pressure by the day. And depending on the outcome of the extraordinary general meeting that has been scheduled for Wednesday, 27 August, at the request of a group of South African institutional investors, we could see an equally big hitter like Des de Beer landing up on the board as well. But why all this interest and opportunistic dealmaking activity? Why are such impressive sharks circling this particular boat? Blood in the water Although MAS isn't exactly a household name, it does have a market cap of R15.6-billion. Despite this significant size, MAS has been struggling to prepare for upcoming bond maturities, flagging weak support in the bond market for companies with MAS' risk profile. This led to the suspension of the MAS dividend in 2023 and subsequent panic selling by dividend-focused investors. Then, as various other strategies to strengthen the balance sheet came to fruition, investors with more of a net asset value (NAV) or total return focus (vs purely caring about the dividend yield) bought shares, leading to a recovery in the share price to levels seen before the panic selling. But here's the really important bit: the current share price still represents a substantial discount to NAV, which means that there's money to be made by getting control of the assets and managing the balance sheet in such a way that value can be unlocked over time. A lot of money. And in reality, the progress made by MAS towards being ready for bond refinancing or redemption activity is probably the major catalyst for the recent flurry of interest, as the best time to acquire control of a business is when it is still a recovery story rather than a bright and shiny object that everyone loves (and hence wants to be paid a fortune to part with). Either way, the substantial gap between the 52-week high of R24.65 and 52-week low of R15.76 tells quite a story, with plenty of opportunities for traders along the way. But aside from the short-term gains (and losses) on offer, the real story here is the battle between Prime Kapital and Hyprop, with both parties keen to get their hands on the MAS value unlock opportunity. Disclosure, dividends and liquidity – these are the tools of war In the world of corporate finance, parties bring different negotiating tactics to the table. At Prime Kapital for example, one of their key strengths in this fight is that they hold the keys to unlocking the capital that is currently tied up in the joint venture between MAS and Prime Kapital. With so much focus on the balance sheet at MAS and a desire to get back to paying dividends, that capital is a highly valuable bargaining chip. This joint venture has been a major bone of contention for institutional investors, with allegations that the board of MAS didn't disclose important elements of the joint venture agreement to the market. Simply put, investors have been caught by surprise that Prime Kapital holds quite so much influence over the broader MAS balance sheet and cashflow profile. This has led to the demand by investors for changes to the board, which would include the removal of a couple of directors and the appointment of several new independent directors. The 'white knight' for these investors is Hyprop, a JSE-listed Reit (real estate investment trust) that is well known to the local institutional investor community. Such is the support that Hyprop enjoys that it had no difficulties in raising more than R800-million in an accelerated bookbuild process, based on little more than a vague suggestion that it would have a go at acquiring MAS if it raised the money. But of course, R800-million is nowhere near enough to acquire control in a fund with a market cap of R15.6-billion, which brings us to the next negotiating point: liquidity of the shares. For Prime Kapital to acquire control of MAS, it needs to convince shareholders to accept a part-cash, part-shares deal. Although it is currently suggesting that it would put more cash on the table than Hyprop (which is a positive), the downside to its indicative offer is that the equity portion would take the form of an inward-listed preference share that is unlikely to have much liquidity at all. The actual terms of the preference shares do have some appealing features, but they will almost certainly require investors to take a long-term view of holding them until some kind of redemption event. In contrast, Hyprop shares are liquid and investors who swap their MAS exposure for shares in Hyprop would have no trouble in reducing that stake if required. The Hyprop offer is thus perceived as having a stronger equity portion, while the Prime Kapital indicative terms are stronger on the cash side. Understanding these levers is important, as it shows how we got to a place where Hyprop put in a bid that was terminated almost as quickly as it arrived. A highly unusual offer structure Offers to shareholders are usually open for a long time, as there's a process in which the board of the target company is given a chance to hire an independent expert and give the market a proper view on the transaction. Such offers are also usually open for acceptance even once important conditions have been met, allowing shareholders to accept an offer that they know is going ahead. And in most cases, those conditions are outside of the control of the offeror, i.e. they relate to regulatory approvals. The Hyprop offer followed none of these market norms. Before Hyprop decided to terminate the bid, the structure of the offer was that it would have been open for acceptance for only a few days from when it was announced. This doesn't give the board time to properly opine on the terms, nor does it give enough time for any of the important underlying conditions to be fulfilled. In other words, investors would have to accept the offer (via an irrevocable undertaking) and then wait and see how long it would take for conditions to be met. But there's more: one of the conditions was a demand by Hyprop to be given the same access to information as Prime Kapital, which of course ties in beautifully with the institutional investors and their valid concerns around disclosure shortcomings. Now, had there been no attempt to address those shortcomings, this would be fair. But the nuance here is that the MAS board had already released a detailed legal summary of the terms, so this demand by Hyprop implied that there were still significant disclosure issues. If true, that casts the MAS board in a very poor light. And if false, then it creates inappropriate optionality in the offer that prejudices shareholders who must give an irrevocable undertaking in the hope that Hyprop eventually chooses to go ahead with closing the offer, something that could take several months. As the demand by Hyprop wasn't going to be met by Prime Kapital (as this would've required detailed disclosure of documents by a party that is in no mood to cooperate with Hyprop's bid terms), Hyprop decided to walk away from this offer. Much as it may lay the blame at the door of poor disclosure, I still can't see how they could justify such an aggressive offer structure. Why was it necessary for the acceptance period to be just one week, particularly when the price implied by the offer was at a substantial discount to the current traded price of MAS? What's next? With Hyprop terminating its bid, Prime Kapital has won the first skirmish. But the war is in its early stages, as we are still talking about a substantial property fund that is trading at a juicy discount. Will Hyprop stay in this fight? Will another party enter the fray? There's no way of knowing. All we know is that Prime Kapital certainly isn't going anywhere, as it is a significant minority shareholder in MAS and holds great influence over its economics. We also know that the institutions won't just roll over, as they are pushing for changes to the board and answers about disclosure. It feels unlikely that this will just fizzle out. All eyes will now be on the extraordinary general meeting in August, followed by the responses of the (potentially new) board to the institutional investor questions. If nothing else, perhaps the lesson to learn here is that if you are going to attempt an offer with highly unusual terms, you are setting yourself up for an unpleasant outcome. Had Hyprop simply dialled back some of the terms to more reasonable levels, it wouldn't have given Prime Kapital so much ammunition to discredit its bid. DM
Daily Maverick
11 hours ago
- Daily Maverick
Young investors defy odds, dominate JSE investment challenge amid market turmoil
The June round of the Johannesburg Stock Exchange (JSE) Investment Challenge showcased the exceptional skill and determination of South Africa's young investors. Last month's milestone of the JSE Investment Challenge showcased the exceptional talent and strategic thinking emerging across South Africa's investment community. While teams like ABS5-Pierpoint & Ho from the University of Cape Town and the Real Builders-HSB from Hoërskool Birchleigh made headlines for their impressive performances, they were among many deserving winners recognised for their achievements in a highly competitive field. Their disciplined approach and commitment to research underpinned a performance that reflects both deepening financial knowledge and the growing sophistication of young investors across the country. The ABS5-Pierpoint & Ho team from the University of Cape Town has danced their way to the top of the speculator portfolio university category, clocking a solid 11.43% growth on their investment — a feat that shines bright amid the tricky twists of local markets. Megan Mworia, a computer science and finance student, described their winning playbook with all the calm of a seasoned strategist: 'We had initially decided that we were going to create a safety net.' Lessons from the trading floor Meanwhile, Darryl Nyamayaro, a master's student in financial technology and a returning competitor, brought a refreshing dose of honesty. He admitted that despite dabbling in investing and trading globally as a hobby, navigating South Africa's market labyrinth was a different beast altogether. 'I usually don't invest locally,' he said. 'Navigating the South African markets was challenging.' Their journey wasn't plain sailing. At one point, their returns dipped to a mere 5%, causing some anxious moments that might have had them double checking their safety net for holes. Yet, their confidence prevailed. There are lessons here beyond numbers: teamwork, for one. 'Working as a team is better for getting different perspectives,' Nyamayaro said. He admitted to leaning towards riskier moves, while Mworia kept the team grounded on safer bets. It's a classic investing love story — risk and caution held in a delicate, profitable balance. For Mworia, relentless market research before and during the investment process was the game changer. Teamwork, trials and triumph Meanwhile, teamwork, trials and triumph defined the journey for another group — Hoërskool Birchleigh's Real Builders. Oratilwe Bhengu proudly captured the spirit of their team: 'Our group was made to reach great heights, be the best, and win any challenges that come our way — and we did.' Their success in the June monthly challenge was fuelled by a mix of hard work, profits, losses and, above all, strong teamwork. Bhengu gave special credit to their teacher, Giba Mahlangu: 'If it weren't for his support, we wouldn't have won.' Mahlangu is no stranger to the JSE Investment Challenge, having coached several teams to success in his previous role at Acudeo College Crystal Park (ACCP). Adding a fresh perspective, first-time investor in the JSE challenge Tebogo Moloto reflected on his steep but rewarding learning curve: 'I never thought I'd win a monthly competition in my first year of investing… Being part of an experienced group taught me how to buy shares at the right time and make a profit.' Mahlangu summed up the educational side of the experience: 'The JSE challenge shows learners how to take calculated risks without risking real money.' His mission is clear — to inspire learners across South Africa to develop financial literacy and build strong investment skills through challenges like these. June's portfolio winners Schools The Real Builders-HSB of Hoerskool Birchleigh in Gauteng won the income portfolio category, with R10,036.54 growth. Kings of the hill of Ashton International College Benoni, in Gauteng, won the equity portfolio category, with 7.58% growth. George Washington Carver-HSB of Hoerskool Birchleigh in Gauteng won the speculator portfolio category, with 7.98% growth. Masters of Lethukuthula Secondary School in Gauteng won the ETF/ETN portfolio category, with 4.33% growth. Universities ABS5-Pierpoint & Ho of the University of Cape Town won the university speculator portfolio category, with 11.43% growth from 20.61% growth last in the May challenge. UKZN-K Capital of the University of KwaZulu-Natal in KwaZulu-Natal won the university ETF/ETN portfolio category, with 3.48% growth. Smart strategies, real results: your chance to lead next The June winners have proven that careful preparation, teamwork, and a commitment to continuous research — much like the safety-net strategy employed by Megan Mworia and her team — are key to navigating the complexities of financial markets and achieving success. Their accomplishment showcases how a balanced, informed approach can turn unfamiliar challenges into opportunities, reinforcing the JSE Investment Challenge as a vital platform for developing South Africa's next generation of investment leaders. Whether you're a high school learner or university student, it's not too late to register and test your skills; the next winning team could be yours. Registration remains open until September at for schools and for universities. DM
