The government has sold its 13.91 percent stake in Vodacom to the Public Investment Corporation to help fund a R23 billion cash injection for electricity supplier Eskom.
The Treasury announced today that the PIC is acting on behalf of the Government Employees Pension Fund in the sale, which has has been mooted since last year’s medium term budget policy statement.
The Treasury did not disclose the price paid, but said the PIC’s offer “was in line with pricing quoted by other institutions when taking into account the large size of the stake”. It noted that the sale had the benefit of keeping the stake in the hands of a state-owned entity.
Vodacom’s shares, which had closed at R13.87 yesterday, were trading at around R14.40 on news of the sale today. Yesterday’s closing price gives Vodacom a market capitalisation of just over R200 billion and values the stake at R28bn.
In preparation for the move last week, Parliament passed the Eskom Special Appropriation Bill and the Eskom Subordinated Loan Special Appropriation Amendment Bill.
The bills were respectively designed to allow for this special cash injection and to facilitate the conversion of a R60bn loan granted to Eskom a few years ago into equity.
“The sale of the Vodacom stake was the most viable option for ensuring that government was able to swiftly realise the proceeds, and inject equity into Eskom to bolster the utility while simultaneously ensuring government was still able to meet its strategic objectives,” the Treasury said.
The option of selling the stake was considered above those of selling stakes held indirectly through entities such as the Industrial Development Corporation, sale of unlisted stakes in other state-owned enterprises, or ring-fencing and selling assets held by other state-owned companies, such as property.