The Botswana Public Officers Pension Fund (BPOPF) finds itself in a bind over MTN’s plan to sell its 53% stake in Mascom, as the pension fund can only take up P500 million more equity in the telecomms group, according to its investment rules.
Insiders close to the latest developments told Mmegi yesterday that while the pension fund is unhappy with seeing the equity stake go to Zimbabwe’s Econet Wireless, the BPOPF’s statutes limit the amount it could challenge for. Zimbabwean billionaire and Mascom founder, Strive Masiyiwa, will effectively control Mascom should the transaction go through.
At present, the BPOPF’s stake in Mascom is worth P2 billion and under the existing rules, its exposure in a single investment should not exceed P2.5 billion. The pension fund is however strategising a way around the limitation, including the possibility of taking up MTN’s stake and offering it to Batswana via a listing. The BPOPF board is due to sit soon. “There is a lot of value in Mascom but by law, BPOPF has limits on the exposure it can take in any single investment,” an authoritative source said.
“There is an option of a listing which would be great because that equity would be released to the public.
Another option is to target the little shares within the limit.”
The BPOPF board has engaged legal advice on the matter to look at how to prise Masiyiwa's fingers off the MTN stake. “BPOPF does not pre-emptive shareholding or a right of first refusal arrangement with MTN. MTN can sell its stake to anyone and they have taken that decision.
“However, the pension fund and MTN can still discuss these issues and agree on a new deal,” another source told Mmegi.
MTN will be difficult to persuade however as Mmegi is informed that the P3.2 billion Econet will pay for the Mascom shares is a premium. Mascom is reportedly valued at about P5 billion, suggesting MTN’s 53% stake would be just over P2 billion. BPOPF will be hard pressed to justify buying any overvalued shares, particularly as Mascom is a mature business operating in a market experiencing natural churn, or a downturn in customer numbers.
Meanwhile, Mascom insiders have revealed that MTN directors cited “politics” as part of their reasons for welcoming the Econet offer. MTN has publicly said it is reviewing its portfolio across Africa, watching for risks and opportunities, in the wake of harsh lessons in Nigeria where it was fined billions of dollars by regulators.
“The MTN directors told a recent Mascom board meeting that they were sensing some political pressure and that Masiyiwa was favoured as a partner in Mascom. They did not go into details about the pressure.
“Masiyiwa comes in highly connected and politically, more favoured than MTN,” Mmegi was informed.
By yesterday evening, Mascom officials had not responded to Mmegi enquiries on the latest developments.
The BPOPF declined to comment saying the transaction was ongoing with its details confidential.